General Information

The assessment of Latin America by world financial institutions as a loan recipient region is generally very low. In some countries, the economy is indeed in shamble. In other countries (Argentina, Brazil, Nicaragua, Peru, etc.) the currency has an artificial rate of exchange or is controlled by the Government. Pretty soon, these countries will experience the same brutal devaluation that happened in Mexico in December of 1994. Foreign investors are not coming openly specially in Central America, Colombia, and Mexico, because most of them are looking to invest in countries with a good outlook. AAE strategy is to invest in countries with miserable economy but with future potential. Remember Perú six years ago? The inflation was over 7,600 % and the economy was in big trouble. We were among very few people advocating for invest ment in that country. Nowadays, Perú has a flourishing economy and the inflation is less than 15 % (in 1995 it was 10.25%). Of course Perú still has a lot of problems (to say nothing about the recent border dispute with Ecuador), but which country doesn't? The July 9, 1995 victory (64.7%) in the presidential elections of Alberto Fujimori increased immensely the chances Perú has to cure its social and economic problems. Peru obtained Brady Plan in June 1996 for its 12 Bn private debt (The first country in Latin America). Until December 1996 Peru will renegotiate its debts with France, Japan, USA, Italy, Spain, Germany, Canada, The Netherlands, Austria, Belgium, U.K., Norway, Sweden, and Finland. World Bank, BID, IMF, etc., help Peru and other seven Latin American countries to get non-recourse financing for electrical projects.

In July 1996 Peru negotiated with the Club of Paris (creditor countries) and obtained a consolidation of 75% of its "eligible"debt and an extension of its term (restructuring) until 2015 (for 19 years). It is the second major financial renegotiation with the Club of Paris creditor countries, after Russia obtained a restructuring for 25 years. Other Latin American countries follow suit. The electrical law and regulations in Peru are the most liberal in the entire Latin America. Even in the USA there are more constraints, regulations and restrictions than in Peru. Most of the countries, beginning with Argentina and Chile, changed their electrical laws and regulations adopting those of the U.K.

AAE outlook for Latin America is a much more competitive arena than has existed in the past. Even though the demand for power far outstrips the current identifiable supply sources, there are now a number of major companies competing for this market. AAE opinion is that the true quality deals are relatively few. The utility environment in the United States has driven not only the traditional IPP developers to look overseas but also a great number of Utilities. There are huge amounts of money being raised for Latin American infrastructure projects. There are in creasing level of sophistication of the power purchasing countries which together with the multilateral funding agencies and organizations are acting to drive the yields down to a level that will no longer allow exorbitant profits for the quick companies. AAE does feel, however, that the market is stabilizing and that companies who take a long term view will do well.

AAE has also built up clients' business and friendship relations and connections at all levels in energy related industry, both in governments and business communities, established and cultivated during twenty-five years of Latin American activity. These contacts and relations together with a network of former professionals and executives of country Utilities and Governments acting on behalf of AAE help in the development and construction of power facilities.

For the latest information on a specific country, about investment, potential BOO, EPC, O&M opportunity, or political, social, and economical updating E-Mail your questions to us.


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