Meralco nears $1.7-B financial closing for 1,200MW plant

Published March 5, 2017, 10:00 PM By Myrna M. Velasco

http://business.mb.com.ph/2017/03/05/meralco-nears-1-7-b-financial-closing-for-1200mw-plant

Power utility giant Manila Electric Company (Meralco) is targeting to reach financial closing this second quarter of up to $1.7-billion loan component funding of its power generation subsidiary’s 1,200-megawatt (MW) Atimonan coal-fired power project.

“Management has been in discussions with Philippine major banks for the financing of the project with the end view of appointing the Mandate Lead Arrangers (MLAs) to achieve financial close by second quarter,” the company has indicated.

The Atimonan power project is the single biggest investment that Meralco PowerGen (MGen) will be undertaking on its own. It is anticipated reaching commercial operations around 2021 to 2022.

Evaluation on three offers for its engineering, procurement and construction (EPC) contract is also underway. With the $2 million per megawatt rule-of-thumb capital outlay for coal-fired power facilities, the proposed venture may command total investment of $2.4 billion.

The typical financing ratio for such projects would be at least 70-percent loan and 30-percent equity, which entails then that borrowing for the proposed Atimonan project may reach as high as $1.68 billion.

The Atimonan plant is among the three power projects already advancing into construction – forming part of the 3,000 megawatts of greenfield power capacity that Meralco has set on blueprint.

Last year, the first 300MW phase of its 600-MW Redondo Peninsula Energy (RP Energy) project in Subic started moving into construction phase following financial closing of P31.5 billion for its project funding.

“All rights-of-way (ROW) for the Phase 1 transmission line have been secured through a Transmission Line Lease Agreement with the Subic Bay Metropolitan Authority,” Meralco said.

The company added that a separate EPC contract had been sealed with another firm to cover the transmission line work. The biggest hurdle that it has yet to resolve though is regulatory approval on its power supply agreement.

The RP Energy project is a joint venture among MGen, Therma Power Inc. of the Aboitiz Group; and the Philippine unit of Taiwan Cogeneration International Corporation.