The Project consists of three small to medium-size hydroelectric generating facilities located at existing storage dams with a net capacity of 52 MW. The Trojes and Chilatán penstocks were connected to existing low-level outlet facilities that were used for irrigation flow releases. The El Gallo penstock includes a new tunnel with a lake tap to a partially constructed intake structure.

Scope of Services
Hatch provided technical and environmental independent engineering services to support the financing of the
52-MW Comexhidro Hydroelectric Project.

The independent engineering review occurred with the 8-MW Trojes Plant in operation, the 14-MW Chilatán Plant under initial construction and prior to award of the EPC, Tunnel and Transmission contracts to the 30-MW El Gallo Plant. For the technical and environmental review, specific work activities for Phase I services included:

• Review of the Project’s documentation and principal Project contracts and agreements
• Assess the compatibility of the design basis with project operating requirements, site characteristics and off-site transport requirements
• Review of the Project’s designs with focus primarily on the overall designs, performance capabilities, major equipment and redundancies of the electric generating units, as well as interconnection with off-site facilities such as electric transmission. The review included dams (e.g. existing dam design and dam safety review) and hydraulic structures, the powerhouses, and hydroelectric generating equipment and operating constraints in order to evaluate their capability to perform in all anticipated modes
• Review of the key technical issues of all major Project agreements, including power purchase agreements, transmission interconnection, O&M agreements, and water rights agreements
• Review power generation studies performed by others and hydrologic records for the Project and provided forecast of future electricity production
• Review the scope of supply and technical provisions of the Engineering, Procurement and Construction contract document
• Review the completion and performance guarantees and associated liquidated damages and bonus payments, buydown or buyout provisions, liquidated damage caps and total liability provided by the EPC contractor and major equipment suppliers
• Review the proposed design and construction schedule and determine whether adequate provisions have been made for design; equipment procurement, fabrication, shipment and installation; and start-up, shakedown and testing of the Project
• Review the scope of supply and corresponding cost estimate methodology for all project costs, including but not limited to the engineering, procurement and construction contract
• Review the drawdown schedule generally appended to the contract and comment on whether each monthly cash drawdown amount is consistent with the project schedule
• Review and comment on the guarantees provided in the EPC bidding document
• Review the permitting schedule and all available permits or permit applications and identify what major permits have not been obtained
• Review the Environmental Impact Assessments to determine their adequacy in light of standard industry practices, and commenting on potentially significant concerns affecting the Bank’s interests
• Prepare an independent engineering review report that summarized the results of the Independent Engineering review findings, conclusions and recommendations.

Additional independent engineering review services included the following:

• Phase II services (from mid-2004 through 2006), which include construction monitoring of two hydro stations, including (a) review of payment requests; (b) critique of change orders; (c) witness installation of key components; (d) monitor preparation and disposal of punch list; and (e) assessing environmental compliance per World Bank guidelines and project safety
• Phase III services (to occur in 2005 and 2006), which include start-up and acceptance testing monitoring of two power plants including: (a) review test procedures; (b) oversee test operations; (c) interpret test results; (d) certify facilities compliance; and (e) review/witness plant start-up procedures
• Phase IV services (to occur from 2005 through 2015), which include the operation audit of three hydro plants, including: (a) evaluate asset condition; (b) examine cost trends; (c) assess staffing levels and training; (d) review availability of unit; (e) review safety initiatives and environmental compliance; and (d) review performance.