IMPSA assures RP project won’t be affected by Argentina crisis

The CBK Power Co. Ltd. (CBK Power), the Philippine partnership between IMPSA (Industrias Metalurgicas Pescarmona SA) of Argentina and Edison Mission Energy of the United States, has expressed confidence that its operations in the Philippines will not be affected by the current economic and political turmoil in Argentina.

National Power Corp. (Napocor) chief operating officer Asisclo T. Gonzaga said yesterday he had met with some IMPSA officials recently and was informed that the company is willing to remain active in the domestic power industry.

"They are here to stay, that’s their commitment," Gonzaga said, noting that IMPSA has been in the country for a long time.

He said he was also told that local operations of CBK is not likely to be hampered by the current situation in their mother country. "I don’t think they would be affected because they have wide operations in more than 20 countries around the world," he pointed out.

The Napocor official said that IMPSA, through CBK Power, has a total investment of $460 million in the country’s power sector, particularly in hydroelectric power.

IMPSA is an industrial conglomerate with vast experience in the development and operation of hydropower plants. It has designed and manufactured over 7,000 MW of turbines and generators. As one of the world’s lending global power producers, Edison Mission Energy owns nearly 23,000 MW of generating capacity, including interests in over 75 projects worldwide.

In the Philippines, IMPSA is the proponent for the rehabilitation of the Caliraya-Botocan-Kalayaan (CBK) hydroelectric power facilities in Laguna and Quezon. Once completed, the project will function as a grid stabilizer and balance electricity supply and demand in Luzon.

Napocor has turned over the CBK project to CBK Power after the current administration completed all the documentation required for the project.

The completion of the documentation has allowed creditors of CBK Power to achieve the financial closure and disburse the initial amounts of the $460-million investment for CBK’s rehabilitation and expansion.

The Philippine government has released the last document needed for the disbursement of the loan. This document was the opinion from the Department of Justice signed by Secretary Hernando Perez, confirming the validity of the Acknowledgment and Consent Agreement (GACA) of the Republic and other documents provided by previous administrations.

The financing consists of long-term loans for $340 million and equity contributions from IMPSA and Edison Mission totalling $120 million.

Under the plan, the company will run the plants for the next 25 years under a build-rehabilitate-transfer-operate (BRTO) agreement with Napocor.

The loans have been ensured by an innovative private insurance covering the political risk, the largest ever transaction of this nature worldwide.

Specifically, the financing will cover the cost associated with the rehabilitation and expansion of the project.

The financing is also expected to include the disbursement of a special 15-year interest-free loan of $70.8 million from CBK to Napocor, referred to as the security deposit.

The funding of the project will be provided by 19 international financial institutions namely: Societe Generale, BNP Paribas, Dai-ici Kangyo, The Industrial Bank of Japan, Citibank, ABB Structured Finance B.V., ANZ Singapore, Banco Santander Central Hispano, The Bank of Tokyo-Mitsubishi, Bayerische Hypo-und, Vereinsbank AG, Credit Agricole Indosuez, Fortis (Netherlands), KBC N.V. Norddeustsche Landesbank Girozentrale, The Norinchukin, The Sanwa, The Tokai, Westdeutsche Landesbank Girozentrale, UniCredito Italiano and Raiffeissen Landesbank Osterreich AG.

A group of leading insurance companies in the world also provided CBK with the largest private political risk coverage for project finance.