27 July 2011

Developers to raise P39-billion loan for Subic coal project

MANILA — The project developers of the 600-megawatt Subic coal-fired power facility are preparing for loan procurement of P39 billion to bankroll the significant portion of the facility’s implementation cost.

The 70 percent debt portion of the project cost, they said, will be raised on a project finance basis. The project sponsors will be led by Meralco PowerGen Corporation, the power generation unit of Manila Electric Company (Meralco); Therma Power Inc. of the Aboitiz group and Taiwan Cogeneration Corporation.

In a briefing with reporters, Meralco PowerGen executive vice president Aaron A. Domingo disclosed that the project financing will be raised entirely from a syndicate of local banks.

“The structuring of the peso financing and selection of mandated lead arrangers are ongoing,” he said.

Meralco’s equity portion for its more than 50 percent interest in the venture will amount to P8.0 billion to P9.0 billion. Domingo said that will be infused separately through the backing of its parent firm.

From its initial foray into the 600-megawatt coal plant, Meralco is preparing for a grander venture into the power generation sector. In fact, from the 1,500 megawatts of portfolio it has initially cast on blueprint, the company is now looking at increasing that to 1,800 to 2,400 megawatts – the development timelines, of course, will depend on electricity demand expansion.

Moving forward from the signing of a shareholders’ agreement for the Subic facility last week, Domingo disclosed that they are now working next on the engineering, procurement and construction (EPC) contract.

“We are preparing for full EPC contracting strategy with major equipment (boiler and steam turbine generator) suppliers for the bidding and selection by end of December 2011,” he said.

He added that they have already sent request for proposals (RFPs) to three EPC contractors; and also solicited tenders from original equipment manufacturers (OEM) of boilers and turbines.

Based on targets set by the project sponsors, the first unit of 300 megawatts will be on-line fourth quarter of 2014; while the next unit of the same capacity will be on stream six months after. (Myrna M. Velasco, Manila Bulletin)