SBPL seeks $800M in credit

San Buenaventura Power Ltd. Co. (SBPL) is set to borrow some $800 million to finance its development of a 455-megawatt coal-fired power plant in Mauban, Quezon.

The project is but one of many in the pipeline of the Department of Energy (DOE), which it said would be needed to meet the growing needs of residential, commercial and industrial customers in the Luzon grid.

A regulatory filing with the Energy Regulatory Commission (ERC) showed that SBPL hoped to borrow the equivalent of about $800 million in “non-resource project financing.”

This means that the lending bank will be repaid using the profits of the project funded, not from the borrower’s other assets.

The amount is about 70 to 75 percent of the initial project cost estimate. The figures may be different by the time contractual arrangements are finalized, sources said.

SBPL intends to tap local banks to secure a peso-denominated 15-year loan to avoid the risks posed by devaluation.

The company also secured a 20-year power supply agreement (PSA) with the Manila Electric Co. (Meralco), documents from the ERC showed.

Last May 29, Meralco executed the agreement with SBPL for the purchase of contract capacity and associated energy from the plant, which SBPL would build, own, operate, manage and maintain.

The PSA was for the purchase of contract capacity initially set at 455 MW for a period of 20 years from the start of commercial operations. Meralco also has the option to renew the PSA for up to five years under the same terms, according to the ERC filing.

SBPL and Meralco urged the ERC to approve their PSA, saying this would ensure continuous and reliable electricity for customers.

The proposed PSA requires about P13.65 billion for SBPL, or an annual average price of P4.2801 per kWh (plant gate price).

Meralco and SBPL said the price would be “competitively at par” with the rates of existing plants.

Also, the price is the lowest among the offers received for new generating units of power suppliers, documents showed.