WASHINGTON, D.C., July 12 -- The International Finance Corporation (IFC) today signed an agreement to invest US$47.5 million in a private sector power plant, which will be one of the most competitively priced and environmentally clean coal-fired power plants in the Philippines. Under the agreement, the project company, Pangasinan Electric Corporation (PEC), will build, own, and operate a 1200 megawatt (MW) coal-fired power plant at Sual in Pangasinan province on Luzon Island. PEC will sell the electricity to the National Power Corporation (NPC), the state-owned utility, for a period of 25 years, at the end of which the plant will be transferred to NPC free of charge. IFC's financing consists of loans of up to US$30 million for its own account and up to US$200 million for the account of international commercial banks and financial institutions. IFC will also subscribe up to US$17.5 million in the share capital of PEC, amounting to about 5 percent of the total equity. The total project cost is about US$1.36 bil
lion. "Starting with the first independent power generation project in the Philippines (Navotas in 1989), this is IFC's fourth power project in the country," said Mr. Everett Santos, Director of IFC's Infrastructure Department. "The Philippines has now proven that well-structured power projects can attract considerable long-term development capital to a sector requiring substantial investments. Furthermore, one of the most important developmental aspects of the project is the low bulk tariff rate at which the electricity will be sold to NPC. Luzon's economy is likely to benefit greatly from the low cost and reliable supply of power." Consolidated Electric Power Asia Limited (CEPA), a public limited company listed on the Hong Kong stock exchange, is the key investor in the project and will operate and maintain the plant. GEC Alsthom N.V. and CEPA Slipform Power System Limited, a subsidiary of CEPA, will deliver the plant on a turnkey basis (i.e., fixed price, fixed delivery dates, and guaranteed output). IFC a
nd CEPA have identified measures to improve the plant's environmental compliance. The site has been chosen because it requires no dredging and has minimal impact on nearby communities. Scrubber equipment will be installed to remove sulfur dioxide from stack emissions. The plant will meet the environmental regulations of the Philippines Government and the guidelines of the World Bank. IFC will monitor compliance with these regulations and guidelines. Three export credit agencies are participating in the financing: the Export-Import Bank of the United States (US-EXIM), the United Kingdom Export Credits Guarantee Department (ECGD), and Compagnie Francaise d'Assurance pour le Commerce Exterieur (COFACE). The Commonwealth Development Corporation of the United Kingdom (CDC) is providing both a loan and an equity investment in the project. In addition, four major banks, Samuel Montagu, Banque Paribas, Banque Indosuez, and Citibank are providing direct loans as well as underwriting the export credit facilities and pa
rt of IFC's syndicated loan. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
