MGen tapping BPI, PNB for P100-B loan to fund Quezon power project

Meralco PowerGen Corp. (MGen) has tapped Bank of the Philippines Islands (BPI) and Philippine National Bank (PNB) to finance the 2x600megawatt (MW) coal-fired power plant in Atimonan, Quezon.

MGen is the power generating unit of Manila Electric Co. (Meralco).

BPI and PNB are the two major lenders for the P100billion loan for the power plant under Atimonan One Energy Inc. (A1E), Meralco president Oscar Reyes said in an interview last week.

Earlier, the company said it is looking at seven to eight banks to finance 70 percent of the project cost estimated at P135 billion. The 30 percent will come from equity.

To close the massive borrowing, MGen is waiting to secure the power supply agreement which is among the deals still pending with the Energy Regulatory Commission (ERC).

“We continue to engage with ERC and are asking them to kindly (process our PSA). We filed our application for PSA approval in April 2016 so it’s been close to 16 months,” Reyes said.

Meralco filed seven power supply agreements (PSAs) involving 3,551 MW with the ERC on April 29, 2016, a day before the new effectivity date of the competitive selection process (CSP) policy requiring distribution utilities to undertake competitive bidding to secure PSAs with generation companies.

Full capacity of the Atimonan project will be sold to Meralco under a 20-year PSA.

The regulatory approval should come soon as prolonged decision could effect higher costs, Reyes said.

“The important thing is, every month, results in higher project cost because the EPC (engineering, procurement, and construction) cost are increasing and exchange rates are moving. So in order to ensure the viability of the project, and the lower price for consumers, it’s best if early approval can be given,” he said.

Earlier this month, the ERC vowed to act on Meralco’s PSAs in three months, a working target set by the regulator after being grilled by lawmakers in a congressional hearing.

While approval is pending, MGen is evaluating bids from three potential EPC contractors and is scouting for prospective partners in the project.

Site preparation is targeted in mid-2017, while project completion is eyed in late 2021.

It has recently completed the resettlement of affected households to allow main project construction to proceed on schedule.