NEDA approves loan extension for $82-M geothermal power projects

The National Economic and Development Authority (NEDA)has approved the loan extension for an $82-million geothermal power project managed by the state-owned National Power Corp. (Napocor).

The NEDA Board first approved Napocor’s request to extend the loan closing date for the Tiwi and Makban geothermal power plant partial rehabilitation projects from June 2005 to December 2005.

The extension request of the loan validity from the Investment Coordination Committee (ICC) is based on the approved supplemental agreement between Napocor and Mitsubishi Corp., which states that the contract for Makban plant will be completed only on September 2005.

Although a separate supplemental agreement for the Tiwi plant with Marubeni Corp. is yet to be finalized, Napocor also anticipates the project to be finished beyond the approved loan closing date of June 2005, which is actually an extension from an original date of June 2004.

Earlier, the ICC approved the partial rehabilitation works for the Tiwi and Makban plants in 2001 worth $82 million. Ninety-five percent of the cost would be funded by two loans from Japan Bank for International Cooperation (JBIC), which was obtained in December 1994 with an initial intention for full, rather than partial, rehabilitation of the geothermal plants.

NEDA also gave the go-signal to the expanded capacity addition program for existing small power utilities group (SPUG) areas worth P1.85-billion. However, the SPUG project will not get a sovereign guarantee.

"Generous guarantees (including those arising from the government’s contracts with independent power producers or IPPs) were given by previous

administrations as a form of incentive for big-ticket projects. But the Arroyo government, which is implementing fiscal discipline to achieve a balanced budget, has since then been stricter in issuing sovereign guarantees to contain its contingent liabilities which will be paid by the Philippine government in case the borrowers declare a default," the NEDA said in a statement.

The project on expanded capacity addition for SPUG areas is in line with Napocor’s missionary electrification function. It mandates for continued providing power generation, and associated power delivery systems in areas that are not connected to the national grid.

Through supply and demand projections, Napocor identified 21 various areas as top priorities for development this year. These localities are in Palawan, Cebu, Romblon, Albay, Batangas, Occidental Mindoro, Quezon, Surigao del Norte, Sulu, Basilan, Sukltan Kudarat, and Cagayan de Tawi-Tawi.

The P1.85-billion project, which will cover the identified areas, is intended to augment existing power facilities and replace old units to keep up with the growing power demand in these localities.