1 / 15

Salsa by Sunday Andrea Fernandez Jason Haight Michael Philipse Doug Rodriguez Cesar Villaseñor

The Cemex Request-for-Proposal: An Auto-Generation Energy Project Emerging Markets February 24, 2003. Salsa by Sunday Andrea Fernandez Jason Haight Michael Philipse Doug Rodriguez Cesar Villaseñor. AGENDA. INTRODUCTION—THE SETTING CEMEX MEXICO & THE MEXICAN ENERGY SECTOR

Download Presentation

Salsa by Sunday Andrea Fernandez Jason Haight Michael Philipse Doug Rodriguez Cesar Villaseñor

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. The Cemex Request-for-Proposal:An Auto-Generation Energy ProjectEmerging MarketsFebruary 24, 2003 Salsa by Sunday Andrea Fernandez Jason Haight Michael Philipse Doug Rodriguez Cesar Villaseñor

  2. AGENDA • INTRODUCTION—THE SETTING • CEMEX • MEXICO & THE MEXICAN ENERGY SECTOR • POWER GENERATION IN EMERGING MARKETS • THE TEG PROJECT • FRAMING THE DECISION TO BE MADE

  3. /TEG International Tender for the Development, Engineering, Financing, Construction, Ownership,Operation and Maintenance of the TERMOELECTRICA DEL GOLFO PROJECT BIDDING RULES AND PROCEDURES 1998  Strictly Private and Confidential

  4. CEMEX • The company • 1906 founded • 1985 International Expansion • 1996 diversification thru M&A • Entering markets whose economic cycles operate independently and which offer long-term growth • 1998 • World's third-largest cement company • Mexico 45% (Sales & Assets)

  5. PEMEX & CEMEX • Cemex • Has a contractual, 20-year relationship with Pemex to take high quantities of petroleum coke • Petcoke: low-value by-product of petroleum refinery • Guarantees petcoke price and quantity supplied • Win-Win contract • Termoelectrica del Golfo (TEG) Synergies • Electricity generator using petcoke as fuel source • Demand=Supply, 1.75 Millions Tons of petcoke per year • Cemex guarantees petcoke supply for its cements plants (50%) and for the power plant (50%) • Cemex buys all energy produced by plant

  6. ENERGY, ENVIRONMENT & CEMEX • Cement production is an energy-intensive process • 50% of its manufacturing cost related to energy • 60% thermal energy, 40% Electricity • Rationale for project: • Guarantees the energy supply for cement facilities • Reduces financial and operation risk by minimizing the volatility of energy prices • Leverages access to petcoke for cement and energy production • Minimizes environmental impact thru a eco-efficiency program

  7. Energy Supply and Demand • 98% of Mexico´s energy is generated by two state-owned companies • Demand: growing at 6% • Public utilities do not have the resources to expand energy production Note: 1 Petajoule= 10^15 joules 1 barrel of crude = 6,000 mega joules

  8. Remedies and Power Politics • 1917 Constitution: All energy for “public use” must be produced by State. • 1992 Amendment: Changes definition of “public use” to exclude self-generation and independent producers • 1999 Reform Efforts: failure • Self-generation licenses issued (politics clouds legality) • Electoral Politics: politics creating uncertainty • PRI: old party line • PAN: limited private sector involvement in energy • PRD: ???

  9. Uncompetitive Prices are big disad for Cemex • Average electricity prices for industrial use: • World Average: US$.056 per KWHr • Uncompetitive relative to NAFTA partners: • Mexico: US$.0475 • USA: US$.0427 • Canada: US$.0386 • Cement production is energy intensive (50% of variable costs). • Cement production consumes 3% of Mexico’s energy. .

  10. MEXICO´S ENERGY SECTOR Natural Gas Gasoline Petcoke

  11. POWER GENERATION IN EMERGING MARKETS • Structure of independent power projects • Non-recourse (off-balance sheet) • High leverage • Construction, operating, some fuel risk with sponsor • Take-or-Pay feature • Regulation contained in contract

  12. TEG PROJECT • Termoeléctrica del Golfo is the legal entity with a self-generation licence. • DFCOM of 230 MW petroleum coke-fired power plant • Project will generate electricity for thirteencement plants • Surplus power will be sold to the Comisión Federal de Electricidad (“CFE”), the public electricity utility.

  13. TEG PROJECT • Funding of $369 million • Debt: • Coface: $100 million • IDB: $75 million A loan $102 million B loan • Equity: • Cemex: 1% • Successful bidder(s) 99%

  14. TEG PROJECT • SBS, S.A. • Extensive track record in power plant construction • Extensive operations experience as an operator (Africa, Asia, South America)

  15. Discussion • Sovereign risks • Operational risks • Financial risks • Environmental risks • Social risks

More Related