Manila, May 16, 2005
— The International Finance Corporation, the private sector investment arm of the World Bank Group, signed an agreement to provide its first local currency loan in the Philippines for up to $15 million equivalent to Cagayan Electric Power and Light Company. Known as CEPALCO, the company is the country’s fourth-largest private electricity distribution company, serving nearly 92,000 customers in northern Mindanao.
The project supports the economic growth of a less developed region of the country. CEPALCO provides services in and around the city of Cagayan de Oro. It has a peak demand of 113 megawatts, which represents about nine percent of the total electricity demand in Mindanao.
By providing a 12-year financing in pesos through the local swap market, IFC is supporting critical infrastructure needs while furthering the development of the country’s long-term hedging markets. Since its inception in 1952, CEPALCO has funded its network expansion and assets through financings of five years or less due to its lack of access to debt or capital market financing. Through IFC’s long-term financing, the company can now pursue its expansion program through a more stable financing structure.
This is IFC’s second investment with CEPALCO. In 2003, IFC agreed to finance a $5.4 million solar photovoltaic power project on the island of Mindanao with partial funding from the Global Environment Facility. Operational since 2004, this new plant, along with an existing hydroelectric plant, constitutes the first full-scale demonstration of the environmental and economic benefits of combining hydroelectric and photovoltaic power. It is also the largest grid-connected photovoltaic installation in the developing world.
“IFC is committed to improving infrastructure in the Philippines with companies dedicated to good practices,” said Javed Hamid, IFC’s Director for East Asia and the Pacific. “This project supports CEPALCO’s growth plans through a local currency financing that helps it make critical investments in its distribution network.”
“CEPALCO needs to modernize its distribution facilities to meet an increasing demand in its service area,” said Mrs. Consuelo Tion, CEPALCO’s Chief Operating Officer. “With the IFC loan can face the challenge of implementing our company’s plans and projects, and move on to greater heights.”
Ms. Nina Shapiro, IFC Vice President, Finance, said, “This transaction uses the developing peso/dollar currency swap market. By improving liquidity and tenor in this market, transactions like this are an important step in helping Philippine companies better manage their foreign exchange risk.”
For more than 40 years, IFC has demonstrated a strong commitment to promoting private sector development in the Philippines. The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses.
In its fiscal year that ended June 2004, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
