Meralco Powergen seeks financing for coal-fired plant

MERALCO POWERGEN Corp. (MGen), the power generation arm of Manila Electric Co. (Meralco), is in talks with local banks to fund the bulk of the P135 billion cost required to build its 1,200-megawatt (MW) coal-fired power plant in Atimonan, Quezon.

At the same time, the company is discussing with prospective partners for a plan to sell down by 49% its stake in the project under MGen unit Atimonan One Energy, Inc. (A1E).

“The total project cost would be in the order of P135 billion thereabouts,” said Meralco Chairman Manuel V. Pangilinan, adding that about 75% of the cost or at least P100 billion would be borrowed.

The rest will be put in as equity by the company, which has scheduled the site preparation work for the two- unit ultra supercritical coal-fired power plant in the coming months. Each of the plant’s unit will have a capacity of 600 MW.

Angelito U. Lantin, Meralco senior vice-president, said the company is “in the thick of discussions with local banks on the entire debt requirement of the project.”

Site preparation works are targeted to start by the third quarter. “We expect the completion of Unit One to be in late 2021. Unit Two to follow the following year,” Mr. Lantin added.

Oscar S. Reyes, Meralco president and chief executive officer, said he expects the debt financing to be closed by the second quarter.

“We will take about eight banks,” he said.

Meanwhile, Mr. Pangilinan said four companies, both local and foreign, have offered to join the Atimonan project. An evaluation of the terms offered by the bidders is going on.

“Meralco will keep at least 51%. I think it depends on the final thinking of how much we should own for Atimonan,” Mr. Pangilinan said. “We will not sell control.”

He declined to identify the bidders, but said the Gokongweis are not among them.

“[The Gokongweis] already own indirectly through MGen. No they’re not [ bidding],” he said.

MGen has appointed Citibank as its financial advisor for the deal.

Mr. Pangilinan said the stake sale is not conditional to the project’s financing. “It’s good for the banks to know, say, within the year, if indeed we close the financing in the next few months. Then I think the equity part should also develop.”

Company officials said the Atimonan project remains on schedule despite some delays in some regulatory approvals.

In April last year, A1E signed a power supply agreement ( PSA) with Meralco for the full output of the power plant. The supply deal is awaiting the approval of the Energy Regulatory Commission ( ERC).

“We have the grid interconnection approved by the ERC in January this year. Also in the same month, we signed the connection agreement with NGCP (National Grid Corporation of the Philippines). So the ability to connect to the grid is already approved,” Mr. Lantin said.

Mr. Pangilinan said: “It’s rather premature to talk about delay because we are moving, at least on the Meralco side, as quickly as we can.”

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc.

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