"IFC is delighted to be partnering with the Philippine government and the private sector to establish an efficient, effective structure that can act as a model to meet a growing demand for power and promote rural electrification, furthering the development objectives of the government," IFC’s country manager for the Philippines and Thailand Vipul Bhagat said.
Under the terms of the agreement, MPPC will supply 13 megawatts of dependable electrical capacity to which currently relies on just eight megawatts of electricity per day, usually experiencing interruptions for several hours a day.
MPPC has also committed to provide electricity at a cost of P6.99 per kilowatthour, about half the current generation cost of between P12 to P14 per kwh.
"The resulting contract will use private sector capital and expertise to improve the affordability, quality, and capacity of power generation for Masbate, increasing local access to electricity and supporting the province’s overall development," said Sanjay Grewal of IFC’s Advisory Services Department.
In June 2004, IFC was retained by the Department of Energy and the National Power Corp. (Napocor) to develop contractual agreements and a regulatory framework to attract private sector capital and expertise to power generation for remote islands.
Some 74 remote, off-grid islands are currently the responsibility of the Napocor’s Small Power Utilities Group. The annual cost of supplying power to these islands amounts to P2.1 billion, with only about 60 percent of that cost covered by a universal service charge to on-grid customers.
The remainder, or about P800 million, is passed on to the National Government as accumulated losses.
IFC acted as transaction advisor for the Masbate selection process and is playing a similar role as the government looks to improve electricity supply to other remote and underdeveloped regions of the country.
MPPC, consisting of EEI Power and Islands Grid Network Philippines bested the offers by two other groups – the Vivant consortium (Vivant Corp. and Gigawatt Power) and DMCI Holdings – as it was selected on the basis of the lowest generation price, after meeting the technical qualifications.
"The price offered by MPPC represents a significant decrease in the cost of generation in Masbate and will help reduce subsidies, thereby improving our organization’s financial position," Napocor president Cyril Del Callar said.
Meanwhile, EEI Corp. said its net profit rose more than four-fold in the first nine months of the year to P104 million from only P22 million the previous year, on the back of higher revenues.
In a financial report filed with securities regulators, EEI said consolidated revenues went up 22 percent to P3.75 billion from P3.07 billion, largely due to the rise in construction contracts to P3.36 billion owing to strong domestic construction activity.
"Our healthy orders coming from domestic and foreign projects, spurred by sustained recovery in the property development and industrial sectors paved the way for the strong results of the company," EEI president Roberto Castillo said.
Castillo said the robust construction market in the Middle East and other countries also boosted EEI’s financial performance during the period under review.
As of end-September this year, EEI had outstanding domestic projects worth P4.38 billion and another P7.22 billion in the pipeline in new contracts in Saudi Arabia.
Among its major ongoing projects this year include The Residences at Greenbelt and One Serendra of Ayala Land Inc., Philtown’s Fairways Tower and Kuok Properties’ Shang Grand Tower. — With Zinnia Dela Peña