Manila, May 4, 2007
— DMCI Holdings today sealed a power supply agreement with the Masbate Electric Cooperative (Maselco) to supply more reliable and affordable electricity to more than half a million residents of Masbate, one of the poorest provinces in the Philippines. IFC, the private sector arm of the World Bank Group, structured and administered the competitive selection process that led to the agreement.
Under the agreement, DMCI has to supply 13 megawatts of dependable, uninterrupted flow of electricity to Maselco. The company currently serves 125,000 customers in Masbate, relying on just 8 megawatts of electricity per day, which is usually interrupted for several hours a day. With the new supply, Maselco hopes to increase its coverage to serve 560,000 customers.
“We are delighted with this agreement, which will play an important role in improving the lives of the people of Masbate. Our objective is to help the Philippine government achieve its goal to provide total electricity coverage at the grassroots level by 2008,” said Maselco Board President Elpidio Lim.
DMCI will provide electricity at 7.07 pesos per kilowatt hour, about half of the National Power Corporation’s current generation cost. “DMCI’s proposed cost will be a significant decrease for the people of Masbate and will help reduce subsidies, improving our organization’s financial position,” said Cyril Del Callar, President of the National Power Corporation.
In 2004, the National Power Corporation and the Department of Energy worked with IFC to develop contractual agreements and a regulatory framework to attract private sector capital and expertise to generate power for remote islands. IFC structured and conducted the competitive selection process that resulted in the 15-year power supply agreement. IFC was supported by DevCo, a multidonor program affiliated with the Private Infrastructure Development Group; the Department for International Development in the United Kingdom; the Dutch Ministry of Foreign Affairs; the Swedish International Development Agency; and the Austrian Development Agency.
“IFC’s country strategy for the Philippines includes support for power sector reform through increased private sector participation that promotes competition. We want to partner with the government and private sector to establish an efficient structure that meets a growing demand for power, particularly in rural areas,” said Jesse Ang, IFC acting Country Manager for the Philippines and Thailand. “With more affordable electricity, we hope that more businesses will open and flourish, attracting investors, creating jobs, and improving the economy.”
“IFC wants to help craft a model public-private sector partnership in which the investor achieves full cost recovery and profits from the electric cooperatives and partially through government subsidies. Our goal is to replicate this model in other infrastructure transactions,” said Bernard Sheahan, IFC’s Director of Advisory Services.
President Gloria Macapagal-Arroyo presided over the signing ceremony, held at the Malacanang Palace, to honor private sector participation in electricity transactions that benefit rural areas.
About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit
www.ifc.org
.
IFC in the Philippines
IFC has been investing in the Philippines for more than 40 years and established an office in Manila in 1977. As of March 2007, the country ranked 13th among IFC’s exposures worldwide, with about $427 million portfolio in 31 projects. To complement its growing investments, IFC is also expanding its advisory services to include public-private partnerships and support for small and medium enterprises. IFC is focusing on Mindanao, and in 2006 opened an office in Davao, its capital city.
