Financing of Small hydroelectric power plant | ardshinbank

Financing of Small hydroelectric power plant

1

Provisions

GAF financial resources

Other financial resources

2

Purpose

SHPP construction and/or re-equipment

3

Currency

AMD

AMD, USD, UR, RUB

4

Term

up to 144 months

 180 months

5*

Interest rate

 - 16 % per annum, the calculation of which starts from the date of granting the loan to the last day of the month of receiving the refinancing inclusive

 - 10.5 % percent per year, the calculation of which starts from the 1st day of the month following the date of receiving the refinancing by GAF

contractual

6**

Application screening fee

Contractual: min 150,000 AMD, max 1,000,000 AMD

7**

Issuance fee (charged at the time of issuance and not subject to refund)

Contractual:

min 50,000 AMD, max 600,000 AMD

8

Interest repayment

 monthly

9

Principal loan repayment

based on the client’s ability to generate cash flows, the full repayment of loan at the end of the term is not specified 

10

Principal loan grace period

up to 24 months

11**

Annual interest rate for the unused credit line

0%

**0.5-2%

12

Method of issuance

noncash

13

Acting bank account of the borrower

mandatory

14

Method of use

noncash/cash: for cash use, the clear direction of use of the amount to be cashed is indicated on the check 

15

Minimum amount

5 100 000 AMD or equivalent currency

16

Maximum amount

 for loans provided for the purpose of construction: up to 70 % of the total estimated cost of the project, in other cases it is not specified

17

Cash withdrawal

according to acting tariffs

18

Pledger

Appendix 7

19

Loan collateral

Appendix 1

20

Penalties and fines

contractual

21

Additional collateral

1. sureties of all shareholders (participants);
2. funds circulating in the accounts with Ardshinbank CJSC, without limitation;

3. claim right of the participants to the company (applicant);
4. claim right to payments received for electrical energy provided by Electrical Networks of Armenia CJSC.

22

Previous economic activity of the borrower

not required

23

Conclusion on technical and economic double expertise

Conclusion of the technical adviser of the German-Armenian Fund

Conclusion one of the following companies:

1. ArmHydroEnergoProject CJSC
2. Hydroenergetica LLC

3. Era LLC

24

HPP insurance

1 During the construction, the mortgaged properties that do not directly participate in the construction and electricity production processes of the hydroelectric power plant are not subject to insurance. 

2 SHPP construction insurance according to Appendix 4

3 Insurance of commissioned SHPPs according to Appendix 5

 

Potential borrowers selection criteria

25

potential borrowers preliminary selection criteria

The owner of the power plant must submit a confirmation of participation in the amount of at least 30 percent of the necessary investments in his/her own funds, provided that the mandatory condition “loan/own investments” ratio does not exceed 70/30. Among the forms of own funds, preference is given to cash deposits, except for participation by other means. For example, allocation of construction materials or labor may be accepted, and also evaluated and approved by the Bank.

Investments by the owner must be made prior to applying for the next loan tranche and will be the basis for calculating the amount of the next tranche. After issuing each new tranche (starting from the second tranche), the amount of the loan received at that moment should not exceed 7/3 of the investments made by the owner.

SHPP must be connected to the country's overall power distribution system to ensure full capacity utilization. The utilization factor of the installed capacity of SHPP (calculated by the formula estimated production/maximum possible production) should be more than 20%. This criterion serves for an approximate assessment of the economic efficiency of investments.

The owner must submit an appropriate project for operation of SHPP.

The implementation of individual programs should not have a negative impact on the social situation or the environment. The project must be implemented in accordance with the requirements of the Environmental Impact Assessment (EIA).

Additional criteria and requirements for final selection

All necessary licenses and permits must be available, such as the right to use water, a positive opinion for EIA, a certificate of legality of construction, technical conditions for connecting to the electrical network.

 

Economic and financial analysis

26

Influence of aggregates on the financial analysis

During the financial analysis of the project, the presence of an automatic regulation system for operation of the turbine(s) installed in the SHPP and the amount of inflowing water will be taken into account, and in the absence of an automatic regulation system, possible additional losses will be taken into account in calculation of power production.

Debt service rate

Calculated annually based on forecasted indicators of electrical energy production given by the double expertise conclusion opinion and the current tariff at the time of overview.

* For loans issued under the foreign financial organization resources the following tariff is applied: integral fin. value + at least 2%, other decisions are made at the credit committee.  

For foreign currency loans, the exchange rate is equal to the commercial exchange rate valid in the Bank at the time of interest repayment. In some cases, depending on the specifics of loan processing and in agreement with the client, a different tariff may be applied.

 

Application screening fee, issuance fee, one-time service fee for foreign currency loans are calculated and charged in Armenian drams at non-cash sale rate effective in the Bank at the time of payment.

 

Recurrent service fee for foreign currency loans is accrued in AMD based on the non-cash sales exchange rate effective in the Bank as of the end of the last working day of the month preceding the month of service fee payment.

 

Appendix 1 Loan collateral

 

 

Appendix 7 Requirements to the borrower

1

Borrower

Organizations operating in the RA territory and acting as SMEs under the RA legislation, and individuals engaged in agriculture (over 18 years of age)

2

Minimum activity term

3 months

3

Requirements to the borrower's credit history (for legal entities: owners of above 50% assets, final beneficiaries), including affiliated persons/organizations

absence of loans classified in the last one year at a higher class than controlled

4

Requirements to capital and profit

the total capital and profit of the client for the last reporting year cannot be negative at the same time

 

Guarantor/Pledger

RA resident and non-resident legal entities, individual entrepreneurs and individuals over 18 years of age

 

Requirements to the guarantor(s)'s credit history

absence of loans classified as doubtful or higher class

 

 

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