MERCOFLUVIAL S.A.

1
MERCO-FLUVIAL S.A.

• Country Paraguay
• IIC Financing US3.0 million
• Borrower Merco-Fluvial S.A. and Hidrogas S.A.
• Project
• Description Merco-Fluvial is Paraguayan
  company dedicated to the transportation of
  liquid fuels from Argentina to Paraguay. The
  project consisted of the expansion of
  Merco-Fluvial activities through the acquisition
  of barges for river transportation of
  liquefied petroleum gas (LPG). The project was
  developed in tandem with the construction by
  Petroleos Paraguayos (Petropar) LPG storage
  plant. The plant was built to increase the
  overall efficiency in the transportation of LPG
  from Argentina to Paraguay with the use of the
  Parana-Paraguay waterway. The use of the
  waterway for transportation is expanding rapidly
  with an important impact on regional
  integration. Transportation of LPG by barge
  will allow for substantial savings in
  transportation costs, which would eventually
  result in a reduction of LPGs final price to
  end consumers.

2
TERMS OF FINANCING

• IICs US3 million loan consisted of two
  components Loan I and Loan II.
• Loan I
• Amount US2.5 million
• Term 4 ½ years, including a 9 month grace
  period, with quarterly installments.
• Interest rate LIBOR 4.0 p.a., quarterly
  installments
• Security i) Mortgage of the project companies
  assets ii) Project completion agreement iii)
  Escrow account.

3
TERMS OF FINANCING (Cont.)

• Loan II
• Amount US0.5 million
• Term 5 years, with bullet principal repayment.
• Interest Rate fixed interest rate of 14 p.a.
• Security i) unsecured

4
IICs ROLE

• Technology Transfer IIC financed the acquisition
  of barges with modern technology for the
  transportation of LPG along the Parana-Paraguay
  waterway. This type of barge, although currently
  being used in the United States and Europe was an
  innovation in the region.
• Long-Term Financing IIC provided the borrowers
  with long-term financing which was not available
  in Paraguay, in particular for small and medium
  size companies.
• Benefits for Final Consumer It was anticipated
  that the change to barge transportation would
  result in a significant reduction in
  transportation costs of LPG, with part of the
  cost savings reflected on the final LPG price to
  consumers.
• Promotion of River Transportation The project
  encouraged river transportation, which was
  considered the most suitable means of
  transportation of fuels for costs and
  environmental reasons.

5
RISK AND ISSUES

• Operating Risk The company innovated in river
  transportation of LPG in the region, which at the
  time was considered a performance risk. However,
  this risk was mitigated since the sponsors had an
  extensive experience in river transportation of
  other types of liquid fuels along the waterway
  Parana-Paraguay.
• Non-renewal of Petropars Contract The project
  was approved prior to the company obtaining a
  long-term contract. However, the risk of not
  obtaining the contract was mitigated by the fact
  that in order to qualify, the company had to be a
  Paraguayan firm with experience in river
  transportation of LPG along the waterway
  Parana-Paraguay, and Hidro-Gas was the only firm
  satisfying both conditions. In addition,
  Merco-Fluvial S.A. and Hidro Gas, through
  transportation of a lower margin product
  generated enough funds to repay the debt.