IFC to lend $300M to Suez Tractebel for Calaca purchase

The World Bank’s private sector investment arm, the International Finance Corp. (IFC), said it may provide $300-million financial assistance to Suez-Tractebel S.A. to partly fund the acquisition of the Calaca coal-fired power facility in Batangas.

“The proposed IFC investment of up to $150-million A Loan and $150-million B Loan will partly finance the privatization of the Batangas coal power plant,” IFC said in its official website.

IFC noted that the winning bid of $786 million was tendered by Emerald Energy Corp., a subsidiary of Suez S.A. of France.

Suez Tractebel, Belgium’s top utility holding company and one of the world’s top independent power producers, through its corporate vehicle Calaca Holdco Inc. (CHI), was declared the highest bidder for the Calaca facility in the auction held last Oct. 16, 2007. CHI is wholly owned by Suez-Tractebel subsidiary Belgelectric Finance B.V.

The multilateral lending firm also noted that for the next three years, it expects the coal-fired power plant to undertake a number of refurbishment works to improve its operational and environmental performance.

Emerald owns and operates 56,000 megawatt (mw) of installed power generation capacity worldwide, of which 8,489 mw are coal-fired.

“The IFC investment amounts to up to $150 million consisting of an A Loan for IFC’s own account and an IFC B Loan of up to $150 million. The total project cost is estimated at approximately $900 million, which includes the privatization bid acquisition price, funding for the debt service reserve account, transaction costs, refurbishment works and initial working capital needs,” IFC said.

The Calaca power facility has two units of 300 mw each. Unit 1 and 2 commenced commercial operations on September 1984 and July 1995, respectively.

The plant is expected to run primarily as a merchant plant, selling electricity through the bid-based wholesale electricity spot market.

Earlier, Suez Energy Asia Co. Ltd. senior vice president for business development in Southeast and East Asia and Africa Ramani Hariharan said the group is in close coordination with the Power Sector Assets and Liabilities Management Corp. (PSALM) for the final closing of the sale agreement by the middle of the year.

Hariharan also earlier disclosed plans to tap IFC, the Asian Development Bank and other financing institutions such as the ONDD or the Belgian export credit agency and other commercial banks to raise the needed 40-percent downpayment for the Batangas facility.

“The 40-percent downpayment will be made when certain milestones required as per the project agreements have been met,” he said.

The company official said Suez-Tractebel is studying various options to expand the coal plant’s capacity by an additional 300 mw to 600 mw.

“The timetable and capital expenditure for the expansion have not yet been finalized,” he said.

Moreso, he added that Suez-Tractebel is very interested in growing its business in the Philippines and “bidding for other generating assets of National Power Corp. is one of the elements of our growth strategy.”

“In addition to possible acquisitions, Suez will pursue the development of greenfield projects. We are interested in renewable energy — wind, geothermal, biomass and hydroelectric — projects in the Philippines. Our strategy is to build a balanced portfolio in terms of fuel mix,” Hariharan said.