A private developer is implementing an LNG import terminal project. The terminal includes a Floating Storage Unit (FSU) moored offshore; a barge or Offshore Service Vessel (OSV) that transfers ISO containers filled at the FSU to shore; and cranes that transfer the ISO containers from the barge or OSV to trucks that will transport the containers to a regasification facility where gas will be injected into a pipeline system. The developer retained a financial advisor to assist in raising the capital to finance the project. The assignment’s main objective is to analyze the LNG supply chain segment from loading LNG onto ISO containers aboard a barge or OSV to its delivery at the inlet of the regasification facility.

K&M was retained to estimate the optimal number of ISO containers, trucks, chassis trailers, stackers, and mobile cranes; the optimal size of the barge; and the operating cost (fuel, lube oil, tires, personnel, etc.) of the ISO logistics supply chain. Specifically, K&M utilized its existing logistics model for onshore LNG transport and incorporated modifications related to the barge transport from the FSU to the port. K&M also conducted a sensitivity analysis on variables such as diesel prices and useful life of the ISO containers. A report with the results of the analysis and the Excel logistics model was provided to the developer upon completion of the assignment.

A confidential Colombian equity fund which provides debt and/or equity financing to power projects engaged K&M to perform a technical, environmental, and social due diligence review of a gas-fired reciprocating engine power generation project composed by six (6) Wartsila 20V34SG generating units, three (3) Jenbacher JGC 320 GS-SL gensets as well as a dedicated gas supply line and 115kV electric transmission line. The technical due diligence review was for a transaction where the confidential client is interested to acquire and operate the asset. K&M’s scope of work included technical due diligence of the power generation assets, as well as environmental legal compliance, and compliance with IFC Performance Standards on Environmental and Social Sustainability.

K&M served as technical and financial consultants to Promigas, S.A. for a private gas pipeline project. The project consisted of a 1,000 km gas pipeline in Colombia and is one of the largest private undertakings in the developing world. Promigas, S.A. planned to build, own, and operate the pipeline. K&M provided overall financial structuring as well as commercial specifications for the project. K&M was responsible for: formulating and optimizing the financial package, interfacing with the World Bank for hard and soft credit facilities, interfacing with export credit agencies, preparing risk matrices, negotiating financial contracts, and evaluating and revising cash flows.

As technical consultants to the US Trade and Development Agency (USTDA), K&M completed a definitional mission study of CORELCA, the electric utility responsible for the Atlantic coast grid in Colombia. K&M conducted an energy loss study of Atlantic coast states including Atlántico, Bolivar, Magdalena, Córdoba and César. This involved an in-depth analysis of CORELCA’s bidding procedures and evaluation of their commercial specifications; an identification of equipment requirements, possible follow-on U.S. exports. In addition, K&M completed a comprehensive review of major existing distribution companies (DISCOS) serving CORELCA and recommended management changes to reduce electrical distribution losses. These included power losses that were both technical- and fraud-related. K&M also completed an analysis of the inventory, distribution, mapping system and networks. K&M’s evaluation and recommendations resulted in a streamlined program approach which saved the Colombian government and CORELCA the equivalent of several million dollars from distribution losses.

K&M served as project developer, technical consultant and owner’s engineer for the 100 MW Mamonal project. As such, K&M’s involvement in Latin America’s first-ever privately financed non-recourse Independent Power Project (IPP) encompassed a broad range of advisory services. K&M developed this pioneering project on a Build-Own-Operate-Transfer (BOOT) basis and structured the transaction to achieve financial close within a period of only 7 months. K&M worked with the government to develop and reorganize the commercial, regulatory, legal and securities framework to allow for private investment. The Mamonal plant sells electricity to both private industries and the national grid, thus the project structure required negotiation of a full range of issues related to market-oriented operation in the energy sector, including wholesale and retail tariff models and methodologies, fuel supply transportation and pricing, and spot market system.
K&M developed risk mitigation arrangements, which included the implementation agreements, long-term lease agreement, and the sales agreements to private and public clients. K&M worked with the various government entities and local partners involved to negotiate the complete terms of the transaction including: fair tariff wheeling arrangements (the first in Colombia); EPC construction contract which included procurement procedures; Power Purchase Agreement (PPA); Security Package agreements; and non-recourse financial agreements.
Mamonal’s success was covered extensively in the trade media. It was recognized as “Deal of the Year” in 1994 by Project Finance International Yearbook and “One of the Ten Most Creative Deals” of 1993 by Infrastructure Finance. The contractual guarantees, risk allocation concepts and the incentive structure of the Mamonal transaction, as conceived and negotiated by K&M, are now being used as a model worldwide. The $100 million facility consists of a 100 MW (ISO) natural gas-fired combined cycle power plant in a steam-augmented mode. The power island includes two General Electric LM 5000 steam injected gas turbines (STIG) and two heat recovery boilers (HRSG). It connects to the grid through a 69 kV switchyard and 1 km 69 kV transmission line. Status: Commercial operation 1994.

K&M was engaged to do the due diligence of the Central Termoeléctrica de Tasajero 163 MW bituminous coal-fired power plant. K&M’s due diligence included design, operations, asset condition, O&M, fuel supply, environmental compliance, electricity market, and developing a financial model.

K&M was commissioned by Mitsui to conduct a prefeasibility study to assess the technical and economic feasibility of the 45 MW gas fired power project located in Colombia. As part of this assignment, K&M performed preliminary engineering to select suitable plant configuration and to assess plant performance, prepared preliminary project cost estimate, developed preliminary financial model to evaluate project economics, and prepared the Pre-feasibility Study Report.

As Owner’s Engineer to KMR Power Corporation, (K&M’s affiliated IPP development and investment company), K&M performed engineering, oversight and construction management services ranging from project conceptual design, through construction, plant startup and commissioning. K&M’s was responsible for technical support and oversight of the Engineering-Procurement-Construction (EPC) contractor. The 240 MW (ISO) Termovalle natural-gas fired combined cycle power plant was developed on an Independent Power Project basis using a Build-Own-Operate (BOO) financial structure. This project required the development of a first-of-its-kind fuel supply agreement for the first major pipeline in the Cauca region of Western Colombia. It involved an innovative financing structure with the local utility and achieved financial closure without a government guarantee. Termovalle was one of the few project-financed greenfield power projects in Latin America to achieve financial close and construction completion. 140 MW of power is sold to the local utility, with the remaining capacity and associated energy being sold to nearby industrial customers or on the open pool system (Bolsa).
The $150 million Termovalle projects consists of one 170 MW Siemens-Westinghouse 501F(C) advance gas turbine generator, one 70 MW Siemens-Westinghouse steam turbine, one heat recovery steam generator, a 4.2 m/s water treatment plant producing demineralized water, a circulating water system for condenser cooling, 115 kV substation and 1 km of 115 kV transmission to the substation. The project reached commercial operation in 1998.

K&M served as Owner’s Engineer to KMR, K&M’s affiliated IPP development and investment company. K&M provided technical assistance during the tendering and the development stage as well as performed engineering, oversight and construction management services ranging from project conceptual design, through construction, plant startup and commissioning. After the project achieved commercial operation, K&M continued providing Owner’s Engineer services during the operating period assisting in managing plant performance and planning and overseeing major maintenance.

K&M served as the turnkey Engineering-Procurement-Construction (EPC) contractor to KMR Power Corporation. K&M had overall technical responsibility for a complete range of engineering services for the 314 MW TermoCandelaria gas-fired simple cycle power project, utilizing 501-F advanced turbine technology. K&M services included conceptual and detailed engineering design, construction management, equipment procurement, environmental permitting, inspection, testing, startup, operation and commissioning of the plant. In consortium with Siemens Westinghouse, which provided the combustion turbine generators, K&M procured and constructed the balance of the plant’s equipment and materials. The facility consists of 2×150 MW gas turbines, a 220 kV switchyard, 1 km of double circuit 220 kV transmission line, water and wastewater treatment systems and miscellaneous support facilities. Commissioned in June 2000, the $175 million TermoCandelaria project operates as Colombia’s first 100% merchant plant, selling electricity into the Bolsa, or spot market.