Meralco inks financing deal for Atimonan project

Power utility giant Manila Electric Company (Meralco) has inked “mandate letters” with seven Philippine banks for the R107 billion worth of loan facility that it will be securing for the 1,200-megawatt Atimonan One Energy ultra super critical coal-fired power project in Quezon province.

“We recently signed mandate letters with a group of seven Philippine banks for R107-billion debt financing for (the Atimonan) project. Easily, this will be the biggest project finance deal done locally,” Angelito U. Lantin, senior vice president of Meralco PowerGen (MGen) has disclosed in a briefing with reporters.

A “mandate letter” sets out the terms of a loan being procured for a project and it also manifests the intent of the banks’ readiness to lend money to the borrower.

Lantin has qualified though that financial closing will be firmed up yet after securing the approval of the Energy Regulatory Commission (ERC) on the project’s power supply agreement (PSA). The identities of the lender-banks will also be revealed at the closing of the deal.

“One of the features of our projects at MGen is we are able to accept peso-denominated capacity fees to help Meralco do away with forex (foreign exchange) risks, so we tried to finance all our projects using Philippine debt financing,” he explained.

Meralco Chief Finance Officer Betty Siy-Yap also noted that the utility firm already prepaid about R2.5-billion loan so they can have borrowing leverage for the Atimonan power venture.

She expounded that while the facility is still due in February 2018, they had to make the prepayment so they can be steered clear of the single borrower’s limit (SBL) set by the banks.

Other preparatory works being advanced by MGen for the Atimonan project are the continued evaluation and negotiations for the engineering, procurement and construction (EPC) contract for the project; as well as the signing of a memorandum of understanding with MIESCOR for the construction of the transmission line that will underpin the capacity wheeling of generated electricity from the plant.

“We still expect completion of the first unit, 600MW by end of 2021,” Lantin said, while noting that the company is also “constructing a 1.6-kilometer access road for easier site access and this is expected to be completed by the end of this year.”