Subject: eletrobolt review
john :
the following points outline the current status of the project for our discussion at 2 : 30 pm ( houston ) :
budget : the attached spreadsheet outlines the current status of the budget as compared to previous reports . the basic status is that we have $ 4 million in unallocated contingency and are basically on budget .
sales process : we have received one indicative proposal from perez companc to purchase 50 % of the project equity in the asset company at approximately $ 3 million below book . this offer is only for the asset company and does not include any transfer of the upside of the marketing company . total has indicated that they will give us an offer next week , but this has been delayed several times . we are currently scheduled to complete the process with perez companc prior to year - end , but the schedule is aggressive .
opic financing : the main finance agreement should be complete by early next week . we have worked with opic over the last few days to change certain parts of the deal structure to accelerate the process . opic is now indicating more willingness to work towards a year - end closing . the financing would represent $ 190 million in financing out of a total capital budget of approximately $ 282 million .
construction financing structure : all construction costs for the project are currently financed through an off - balance sheet / on - credit vehicle with westlb as the lead bank in the group . the financing vehicle contemplates the take - out of the vehicle upon the completion of construction . the definition is in accordance with the construction contract . final completion of construction will not be completed until late december or early january in accordance with the construction contract due to the final completion of the water treatment facilities . we are currently using temporary facilities to run the plant .
enron equity : under the current process , enron would need to contribute approximately $ 45 million in equity in the final capital structure of the project assuming the indicative offer we have from perez companc . the basic issue is the timing of the opic financing and equity syndication closing and the westlb take - out .
commercial operations : upon the completion of testing of the eight unit next week , we are planning to declare the start date under the petrobras agreement such that we can begin receiving the guaranteed payment . the conflict created with this action is that this could create problems with westlb under the construction financing vehicle . the contract is clear that the take - out must occur upon completion in accordance with the construction contract which shall not have ocurred . however , the banks have stated in the past that they did not contemplate taking operating risk . we are working with the finance agreement to ensure that we have a coordinated strategy and story for the banks to keep them comfortable . however , there is a risk that the banks will push for a take - out during this period .
turbine : we are currently evaluting the purchase of a turbine ( only the engine ) which is required to be on - site for operational purposes . this is not a ninth turbine generating set as we had previously discussed . the plan to date has been to lease this unit from ge . however , we were presented an offer to buy a used unit with significantly better economics and operating conditions than the lease . with our current status in the budget , we believe that we can accomplish this and still be under the original construction budget as outlined in the attached table . we are currently expecting to receive a $ 6 . 8 million tax rebate , we have been able to defer $ 2 . 5 million in expenditures contemplated in the original budget ( still included above ) and we have unallocated contingency of $ 4 million .
thanks ,
brett