PSEG Global, the international arm of US energy company PSEG, announced this week, the successful acquisition of Peru’s sixth largest electricity generator, Empresa de Electricidad de los Andes S.A. (Electroandes). With the purchase of Electroandes at a cost of $227.1 million, PSEG Global will be the largest U.S. investor in Peru.

Electroandes’ main assets include four hydroelectric facilities and 460 miles of transmission lines located in the Central Andean region (northeast of Lima) which provide six per cent of Peru’s electricity needs.

Employees of Electroandes have the pre-emptive right to purchase up to 10 % of the company at the same price per share bid by PSEG Global. In addition, Doe Run Peru S.R.L, the largest customer of Electroandes, has the pre-emptive right to purchase up to 30 % of the company on the same terms. Each party has 10 days from the announcement of the winning bid to exercise its option. In addition to the purchase price, PSEG Global has committed to investing $17.5 million in the company over the next five years.

Electroandes four hydroelectric facilities with a combined installed capacity of 183 MW and are Yaupi generating 108 MW, Malpaso 54 MW, Pachachaca 12 MW and Oroya 9 MW. In addition, Electroandes has the exclusive rights to develop a 100 MW expansion of the Yaupi station and a 150 MW greenfield hydroelectric facility. In 2000, Electroandes generated 1150 GW of electrical energy, of which 97 % was sold through power purchase agreements to mining companies in the region.

PSEG Global’s other interests in Peru are through an indirect 44 per cent interest in Luz del Sur, the largest electric distribution company in the country.

“This purchase diversifies our portfolio into hydroelectric generation and is consistent with our corporate strategy of building sustainable businesses in carefully selected markets that provide strong earnings growth and create synergies with existing investments,” said Robert L. Logan, president of PSEG

Americas, the PSEG Global subsidiary that operates in Latin America.

“PSEG Global has confidence in the Peruvian system, and we look forward to working with local officials, Electroandes’ employees and our customers to build a strong partnership for the future,” said Logan.

The closing for the acquisition is scheduled for September 30, 2001. The purchase will be completed through a debt/equity financing, with the majority to be funded by equity from parent company PSEG.

Earlier this month, PSEG Global announced another acquisition in Latin America when it exercised its option to take up an additional 49 per cent stake in Empresa Distribuidora de Electricidad de Entre R�os S.A. (EDEERSA), the main distributor of electrical energy in the Province of Entre R�os, Argentina. The additional shareholding taken up by PSEG brings its total ownership of EDEERSA to 90%.

EDEERSA distributes electrical energy to more than 230,000 customers throughout its service territory of approximately 21,000 square miles.

At the time of the acquisition, Robert Logan made it clear that the intention was to expand the company’s activities in the region.