Manila, December 12, 2006
- The International Finance Corporation, the private sector arm of the World Bank Group, has made a $50 million equity investment in PNOC Energy Development Corporation as part of the state-owned enterprise’s initial public offering on the Philippines Stock Exchange, which will take place on December 13, 2006. The investment supports the Philippine government’s goal of privatizing energy sector assets and will improve efficiency and aid expansion in the geothermal energy sector. It will assist the country’s efforts to improve its energy mix toward the use of indigenous and renewable sources of energy.
The privatization of state-owned power sector assets is a key element of the Philippine government’s reform program for the sector. The global public offering of up to 40 percent of PNOC-EDC’s shares provides the reform agenda with renewed impetus, helping restore investor confidence and increasing private sector participation in the power sector.
“We are very pleased to participate in this transaction. IFC’s investment in PNOC-EDC fits our strategy of supporting infrastructure investments and promoting renewable energy development, a priority area for the government of the Philippines,” said Vipul Bhagat, IFC’s Country Manager for the Philippines and Thailand.
Through its investment, IFC has acquired approximately 5 percent of PNOC-EDC’s common shares sold through its primary offering. The amount raised through the primary offering, which represents half of the total offering, will be used to rehabilitate, expand, and acquire new equipment for developing geothermal power, a clean and renewable energy source that is also cost competitive. Additional investments by PNOC-EDC that the IPO will support should help reduce the cost of power in the Philippines, contributing to private sector competitiveness and make electricity more affordable for low-income households.
“With the success of the IPO and the improved access to capital markets, PNOC-EDC can become a global player in the development of geothermal resources,” said Vincent Gouarne, IFC’s Director for Subnational Finance. Subnational finance is a joint World Bank-IFC initiative to support well-run subnational entities, such as local governments and public economic enterprises, in their financing programs without the need for national government guarantees.
“We look at IFC’s investment in our offering as an affirmation of our strategy to attract private sector participation and explore new sources of renewable energy,” said PNOC-EDC President and CEO Paul Aquino.
IFC’s participation in the IPO follows its provision of advice to PNOC-EDC, which outlined improvements to corporate governance that go beyond the benchmarks required by the Securities and Exchange Commission and the Philippines Stock Exchange. As PNOC-EDC considers further opportunities for expansion, better governance practices will be part of its strategy to improve performance, gain better access to capital and partners, and become a model for privatizing state-owned enterprises in the Philippines and the wider region.
About IFC
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improve social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds for private sector investments in the developing world and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit
www.ifc.org
About PNOC-EDC
PNOC-EDC is a geothermal power company, which prior to the IPO was wholly owned by the government of the Philippines through the Philippines National Oil Company. PNOC-EDC has a current installed capacity of 1,142 megawatts, which represents about 7 percent of the country’s total power generation capacity and 60 percent of its geothermal capacity. The company owns and operates four steam fields: Bacman in southern Luzon, Leyte A and B in Leyte, Palinpinon in Negros and Mount Apo in Mindanao. It is also currently developing new geothermal projects that could raise an additional 265 MW capacity. Apart from developing geothermal power, PNOC-EDC is looking at other renewable energy sources. It is building a 30 MW wind power plant in northern Luzon and is evaluating other wind and hydro investment opportunities in the Philippines.
