Nevada-based Ram Power Corporation and its wholly owned subsidiary, Ontario-based Polaris Geothermal Inc., have agreed financing with the International Finance Corporation (I.F.C.) for the expansion of a geothermal project in Nicaragua.

A member of the World Bank Group, I.F.C. proposed to lend up to $40 million for the $216 million second phase of the San Jacinto Tizate geothermal project located near the city of Leon.

The finance organization will also help secure syndicated financing to cover the balance. It indicated that it may provide an additional $20 million in mezzanine debt or possible equity to the project.

The parties expect to close the deal by June next year.

Hezy Ram, chief of Ram Power, expressed confidence that they would be ready to commission the full 72-megawatt capacity of the facility by 2011. At present only 10 MW of the plant’s full capacity is on stream.

Polaris plans to increase the production to 203 MW and then to 340 MW once the company can maximize the geothermal resources of the site in the medium term.

It will sell power generated by the plant to the Nicaraguan power subsidiaries of Union Fenosa, a Spanish utility, under a 25-year power purchase agreement. Both Polaris and its parent company, Ram Power, are listed on the Toronto Stock Exchange.

The $358 million San Jacinto Tizate geothermal reservoir is said to be one of the largest geothermal resources being developed in the Western Hemisphere. A geothermal consulting firm, Sinclair Kight Merz, estimated that the area holds a potential geothermal capacity of 277 MW.

-   Natassia Y. Laforteza