Aboitiz Power Corp. expects to sign by early next year two loan agreements that will help finance two crucial coal-fired power plants—one in Luzon and the other in Mindanao—worth a total of $1.82 billion (about P78 billion).
In an e-mail to the Inquirer, APC chief financial officer Iker Aboitiz said one of the loans would be used for the construction of the 600-megawatt coal facility in Subic, which the company is undertaking with power distributor Manila Electric Co. (Meralco) and Taiwan Cogeneration through Redondo Peninsula Energy Inc. (RP Energy).
According to Aboitiz, the total budgeted capital expenditure for the Subic power project was $1.1 billion, of which 75 percent will be funded through non-recourse financing while the remaining 25 percent will be funded through equity infusion.
Co-lead arrangers for the planned financing are First Metro, BDO Capital and PNB Capital, he added.
In the meantime, the total budget for the 300-MW coal-fired power plant in Davao, which APC is undertaking through a wholly owned subsidiary Therma South Inc., was $720 million. The amount will similarly be funded through a 75-percent non-recourse financing, of which the lead arranger is BDO Capital, and 25 percent in equity infusion.
All the loans will be signed and undertaken at the project company level, according to Aboitiz.
“Only mandates have been signed as commercial terms are still being negotiated. Loan signing and the start of the drawdown are scheduled for early next year,” Aboitiz said.
Both coal facilities are considered crucial by the Department of Energy as these will help boost power supply in their respective areas.
The Subic coal project by RP Energy is still facing opposition from local government officials and various civil groups, and has yet to secure environmental compliance certificate for the second 300-MW unit of the project. Project proponents, however, earlier expressed confidence that they would be able to secure the ECC by September or October this year, which would enable them to proceed with the construction of the power plant.
The construction of the coal-fed facility, which will generate 120 job opportunities, will be done in two phases. The first 300-MW unit is expected to start operations by 2015, with the second 300-MW unit to follow.
RP Energy expects to sell part of the plant’s output to Meralco, the country’s biggest power distributor, although this has yet to be negotiated by the parties and approved by the Energy Regulatory Commission.
In the meantime, APC, through Therma South, has already entered into $546 million (roughly P23 billion) worth of contracts with local and foreign contractors for the construction of the Davao coal plant. These contracts were specifically for the construction, supply and coordination concerns relating to the Davao coal facility, which will be located at Barangay (village) Binugao, Toril District, Davao City, and in Barangay Inayawan, Sta. Cruz, Davao del Sur.
APC officials earlier stressed the importance of the planned coal facility in providing reliable and affordable power, which is essential to Davao City’s growth and development.
The coal plant was necessary to help ease the expected power supply shortfall of about 480 MW in Mindanao by 2014—reportedly enough to cut off the entire power supply in the cities of Davao, Cagayan de Oro, General Santos, Zamboanga and Butuan.