Subic Enerzone secures P100-M loan from DBP for capex

Aboitiz-run Subic Enerzone Corp. (SEZC) has secured a P100-million loan from the state-run Development Bank of the Philippines (DBP) to fund its capital expenditures.

The loan was approved by the Energy Regulatory Commission (ERC).

In its approval, the ERC said SEZC has the capacity to pay up the loan, whose use will be beneficial to the company’s customers.

SEZC is a consortium composed of Aboitiz Equity Ventures, Davao Light & Power Co., Aboitiz Power Corp. and San Fernando Electric Light & Power Co.

The power utility firm is contracted to provide power distribution services to Subic Bay Metropolitan Authority (SBMA) until 2028. The company pays SBMA P40 million annually for the lease of power facilities and other properties.

“A perusal of the evidence presented by SEZC showed that the loan, which shall be applied to finance additional capital projects under the distribution management services agreement (DMSA), as well as to refinance its existing term loan of P185 million with DBP, will benefit consumers in terms of continuous, reliable and efficient power supply as mandated by Republic Act 9136,” the ERC said.

Under the DMSA, SEZC will invest about P368 million within the first five years of the service period to rehabilitate the existing power distribution system at the freeport zone.

On April this year, SEZC has sought the approval of the ERC to secure the loan with DBP with application for provisional authority.

Specifically, the loan will be used to finance its remaining capital projects enumerated under the DMSA in line with its commitment to serving its customers/locators within the freeport in a more efficient and reliable manner.

The 12-year loan will be paid in 48 equal monthly installments commencing at the end of the first quarter from the date of initial drawdown and the corresponding interest rate.

SEZC said no properties were mortgaged for the loan.

The loan will finance additional capital expenditures relative to the rehabilitation/expansion of the Subic Bay Freeport power distribution system and to refinance SEZC’s existing term loan of P185 million with DBP.

Earlier this year, SEZC obtained the ERC’s approval for its unbundled rates with a total revenue requirement of P159.84 million equivalent to an average rate adjustment of P0.3672 per kilowatthour.

In September 2007, the ERC approved capital expenditures to be financed amounting to P210.27 million. The application covers the acquisition of machines and equipment and installation of the meters as well as upgrade of SEZC’s facilities and system lines.

The company has listed 21 projects under its application. Of these, 11 were already completed and amounted to P81.55 million. The 10 remaining projects are still ongoing and would require P179.94 million.

The ERC said approved the additional loan provided that the interests on the loan shall not be utilized or charged to fixed asset procured from the proceeds of the loan.

“SEZC must ensure that the contracting and procurement of the equipment, assets and services have been subjected to transparent and accepted industry procurement and purchasing practices to protect public interest,” the ERC said.

In 2003, SEZC committed to invest P350 million over five years to improve Subic ‘s power distribution system.

The company also signed purchase agreements to acquire sub-transmission assets of the National Transmission Corp. to further improve the reliability and stability of power sold within Subic.