| Borrower/Equity Investment Name |
MIRANT PAGBILAO CORPORATION |
| Country |
Philippines |
| Location |
Pagbilao, Quezon
|
| Project Number |
26716-01 |
| Approval Number |
7089 |
| Type of ADB Assistance |
| MIRANT PAGBILAO CORPORATION |
| 7089 |
Equity Investment |
US$10.00
million
|
Closed |
| 7089 |
Private Sector Loan |
US$40.00
million
|
Closed |
|
| Sector/Subsector |
Energy
/Convent Energy
|
| Thematic Classification |
Economic growth
|
| Responsible ADB Department |
Private Sector Operations Department |
| Responsible ADB Division |
Infrastructure Finance Division 2 |
| Responsible ADB Officer |
Lu Shen |
| Project Sponsor(s) |
Hopewell Holdings Limited (HHL))
|
| Description |
Design, supply, construction, testing, commissioning, and operation of a 700MW coal-fired thermal power plant on a build-own-operate-transfer (BOOT) basis to meet the increasing demand for electricity from the Luzon Grid. The Project, located at Pagbilao (Quezon Province), about 100 miles southeast of Manila, to be operated by HPPC (now Pagbilao) for 25 years (the Cooperation Period). All electricity generated by the Project will be sold to NPC at a price determined in accordance with ECA. At the end of the Cooperation Period, the plant will be transferred to NPC at no cost. |
| Objectives and Scope |
The Project is to establish and operate a700 (2x350) MW base load coal-fired power plant in Pagbilao (Quezon), about 100miles southeast of Manila, Luzon island. It will be structured on a build-own-operate & transfer (BOOT) model. Under an Energy Conversion Agreement (ECA) entered into with the Nat'l Power Corporation, Hopewell will build, own & operate the plant for 25 years after completion (the Cooperation Period). At the end of the Cooperation Period,ownership of the plant will be transferred to NPC at no cost. All power generated will be sold to NPC for distribution. |
| Linkage to Country/Regional Strategy |
The Bank support for private sector participation in the power sector was critical, as the supply of electricity necessary to support economic development was not being met by the public sector, and the country's financial rating was not strong enough to attract international investors. The Bank's loan and equity investment in this Project enhanced investor confidence in the country and promoted private sector participation in power generation and other infrastructure projects. |
Safeguard Categories
|
| Environment |
A |
| Summary of Environmental and Social Issues |
The key environmental concerns relate to air emissions, including sulfur dioxide, nitrogen oxides and particulates; liquid effluents and cooling water discharges; ash disposal; and socioeconomic impacts. The Project successfully met environmental requirements in contractual emissions, liquid effluent, and noise. The effectiveness of pollution control facilities were evaluated via monitoring of air and water quality, and noise levels produced by the plant's operation. An Environmental Compliance Audit Report by GHD Pty Ltd. dated July 2005 concludes that the Company is compliant with: i) the conditions stated in the Environmental Compliance Certificate; ii) commitments made in the Environmental Impact Statement; iii) statutory environmental requirements for air quality management, water quality management, solid waste management and toxic substances and hazardous waste management; and iv) World Bank Environmental Guidelines. Additionally, the Environmental Management Systems at the Pagbilao generating plants have passed the ISO standards and has successfully completed all activities necessary to retain its ISO 14001 Certification. |
| Consultations Planned or Carried Out |
Various consultations with the public were carried out to resolve matters pertaining to environmental and social issues. |
| Concept Clearance |
26 May 1992 |
| Private Sector Credit Committee Meeting |
24 Feb 1993 |
| Board Approval |
18 May 1993 |
| Implementation Progress |
The Project was successfully implemented. |
| Status of Development Objectives |
The Project was constructed at a time when the Philippines was experiencing severe power shortages. This had seriously affected the country's economy, severely disrupted industrial and commercial activities and diminished the confidence of potential investors. At that time, the power situation was expected to worsen as demand projections had significantly exceeded supply forecasts. The Project commenced commercial operations on schedule in 1996 and its operations have been stable during the last 9 years. Although the plant is currently being dispatched at a significantly lower level compared to the base case projections, it continues to serve as a reliable source of low cost power to the Luzon grid. The Project has therefore achieved its primary objective of augmenting the power supply of the Luzon grid and has provided a timely solution to the country's electricity shortage without taxing the limited financial resources of the government. In August 2004, the Pagbilao Power Station was recognized by Power Magazine as among the Top 12 Plants of 2004 chosen from over 100 nominations.
Mirant Corporation, the ultimate owner of the Project is one of the largest foreign investors in the Philippines and was the first company to respond to the Philippines' request for private sector assistance to meet growing electricity demands in the country. The Project has been one of the successful BOOT transactions in the country and its implementation and success demonstrated that private participation and ownership in power projects in the Philippines offered great benefits through (i) infusion of substantial amounts of new investment capital, (ii) reduced burden on public budgets, and (iii) improved incentives for efficiency. ADB's loan and equity investment in the Project enhanced investor confidence in the country and promoted private sector participation in power generation and other infrastructure projects. It also boosted the confidence of other co-financiers (Japan Export Import Bank, US Export Import Bank, Commonwealth Development Corporation) that had helped mobilize the necessary funds for the Project. |
| Material Changes |
Full prepayment of loan principal and interest was made on 15 August 2006 towards the outstanding amount due on 15 January 2007.
Status: Closed effective 15 August 2006. |
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