Pacific Hydro Closes US$360 Million Finance Deal for New Chilean Hydro Project

Australia's leading renewable energy company, Pacific Hydro, announced today that it has closed the largest financing deal in the company's history and has commenced construction of its 111MW Chacayes hydro project in Chile.

The financing, completed late last week, brings Pacific Hydro together with major Italian contractor Astaldi SA in a joint venture where Astaldi will be the lead contractor and 27 per cent owner of the project.

"The arrangements with Astaldi continue our successful track record of attracting the highest quality joint venture partners and we are delighted to have them on as a major participant in the project" said Pacific Hydro Chief Executive Officer, Rob Grant.

"The continued support of our owner, Industry Funds Management, and the raising of almost US$200 million in project finance debt in these difficult financial times is a testament to the strength of our company, the importance of the clean energy sector and the quality of the project."

The US$450 million Chacayes project brings the value of assets in which the company is involved in Chile and Brazil to over US$1.5 billion; most of this investment has occurred in the last 4 years.

A significant driver of the company's investment in Chile to date is the ability of clean energy projects to create carbon credits under the Kyoto Protocol's Clean Development Mechanism (CDM) which can then be sold into the European Emissions Trading Scheme.

"Our ability to create carbon credits under the CDM framework is a critical component of the Chacayes investment decision. In addition to significant regional investment, the project will create 4,200 direct and indirect jobs over the 2 years of construction. We know from practical experience that an emissions trading scheme is a highly effective means of driving investment and creating jobs."

"Australia will benefit from similar significant investment and job creation opportunities once the climate change and energy policies proposed by the Rudd Government are put in place."

"We call on the Australian Parliament to ensure passage of both the Carbon Pollution Reduction Scheme (CPRS) and the 20 per cent Renewable Energy Target (RET) this year so we can set about the task of transforming our stationary energy sector into one that is substantially less carbon intensive and better able to compete on the world stage."

The CPRS will provide the long-term incentive for significant emissions reductions while the 20 per cent RET is expected to result in up to $25 billion invested in clean energy technologies over the next decade.