Energy World revives talks with lenders for Pagbilao project funding

THE local unit of Australia-listed Energy World Corp. Ltd. (EWC) has revived talks with lenders to finance the completion of its 650 megawatt (MW) combined cycle gas-fired power plant after it has received certification from the government that the project is one of national significance.

“We are in the process of finalizing the project funding from the Development Bank of the Philippines (DBP) and Land Bank [of the Philippines] and other institutions, and hopefully we’re about six to eight months away from commercial operation of the first 200-megawatt gas turbine,” said EWC Director Graham S. Elliott in an interview.

The funding will be used for the completion of the power station, he added.

“It’s a re-working of the loan agreement that was signed about three years ago — an updated version of the existing loan agreement,” he said.

Mr. Elliott declined to disclose the amount being borrowed from the lenders, but said the project needs additional funding.

“It’s something around $75 million [that] we’re looking for,” he said.

Aside from the power plant being built in Pagbilao, Quezon province, EWC previously disclosed plans to build a liquefied natural gas (LNG) hub in an adjacent area with a capacity of 3 million tons per annum.

The LNG capacity can support gas-fired power plants with a combined capacity of 3,000 MW. It can provide expansion options for both the company and thirdparty gas customers.

Mr. Elliott said the hub is a strategically important asset for the country’s nascent gas industry. The facility is now 92% completed, he said.

“The delay in the project has been because in order to make the LNG hub terminal commercial we had to have the power station operational. In order to have the power station operational, we had to connect to the transmission lines,” he said.

“The delay came about because the funding banks insisted that we finalize the right of way to make sure that we could connect the power station to the transmission lines. That’s now being done and that’s why we now have the confidence that we’ll be up and running in the near future.”

Ahead of the completion of the LNG facility, EWC plans to source the fuel for its power plant initially from the spot market.

Mr. Elliott said EWC is developing its own LNG production in Indonesia where it has production-sharing contracts with the Indonesian government.

“But we’re also developing projects in the USA so that we can avail ourselves of some of the world’s most economically priced gas and as a long-term solution, we will be looking to bring that gas to the Philippines,” he said.

Despite the delay, there had been no changes in the components or capacity of the project.

“It’s going to be initially the first tank is 1,300 cubic meters of LNG. The second tank will be another 1,300 cubic meters of LNG. The first power station is two units of 200 MW each gas turbines and they will be linked with a 250-MW steam turbine when it’s in combined cycle phase so that would be 650 MW. And in the future we would like to add further expansion of the power generation at the site,” Mr. Elliott said. “We’d like to just keep repeating units up to possibly 3,000 MW.”

Sought for comment, Francis Nicolas M. Chua, DBP first vicepresident and head of the bank’s corporate finance group, confirmed the revival of talks with EWC.

“We’re the arranger for the financing for them. We have actually gotten approval previously on the project. Unfortunately that did not pan out due to other circumstances. So we’re looking at it again and hopefully this time we’ll see it through,” he said.

Mr. Chua said DBP is syndicating the financing with several banks, but declined to disclose the loan amount.

He said the certification from the Department of Energy (DoE) that the Pagbilao power plant is an energy project of national significance would help, but the loan application would be evaluated based on the company’s capacity to complete the construction, ability to pay back, and the necessary regulatory approvals.

Patrick T. Aquino, director of the DoE’s Energy Policy and Planning Bureau, confirmed that EWC had been granted the certification but only for the power plant component.

“EWC has an integrated LNGplus-power plant. The one that was awarded a certificate of EPNS (energy project of national significance) was for the power plant component,” he said.

Mr. Elliott said the certification would bring “tremendous benefit for us.”