Press Release

Peruvian Gencos Enjoy Strong Cash Flow, Revenue and EBITDA Predictability and Stability

Bnamericas Published: Monday, October 10, 2022

Fitch Ratings release

Fitch Ratings-New York/Bogota-10 October 2022: For Peruvian generation companies (gencos), contracted positions drive cash flows, according to a new Fitch Ratings report.

“Gencos with strong contracted positions via purchased power agreements in Peru typically generate solid cash flows from operations,” according to Eva Rippeteau/Director. “Each genco utilizes the spot market for the balance of energy sold. The majority of purchased power agreements are indexed to the U.S. dollar and fuel prices, effectively passing through any variable cost volatility to off-takers, providing even greater revenue and EBITDA predictability and stability.”

Peruvian gencos with flexible cost structures achieve greater profitability and cash flow generation, particularly in periods of commodity price volatility.

Peruvian gencos enacted material deleveraging in recent years, with more deleveraging expected in some cases. Debt amortization, coupled with sustained cash flow generation, should enable Fenix and Kallpa to reduce gross leverage, measured as total debt/EBITDA, to 4.0x. Orazul and Nautilus Inkia Holdings SCS, the parent company to Kallpa and Orazul, stabilized at around 5.0x, however, Inkia may hit lower leverage in the near term.

Gencos with a diverse mix of generation, fuels or inputs are more capable of mitigating risks related to commodity prices and climate. Kallpa’s diverse generation capacity of thermoelectric and hydroelectric compares favorably with single-asset peers Fenix and Orazul.

Peru’s energy generation is split primarily between hydro and thermo. Hydro power plants typically generate around 57% of the nation’s electricity, despite representing only 39% of the effective capacity in the grid. Thermo power plants represent around 38% of generation and 56% of installed capacity. Solar and wind represent the remaining 5% of generation and capacity.

The energy regulatory environment in Peru provides a transparent and structured marketplace free of political influences and supportive of cost-based tariffs.

For more information, a special report titled “Peruvian Electric Generation Companies: Peer Review” is available on the Fitch Ratings web site at

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