IFC says $75-M loan to help lower power rates in Phl

MANILA, Philippines -  The International Finance Corp. (IFC), a member of the World Bank Group, said its $75-million loan to Energy Development Corp. (EDC) will help lower power rates in the country.

IFC said the roughly P3.22 billion loan to EDC, the Philippines’ leading geothermal energy producer, would improve electricity supply, make power more affordable to low-income households, and help enhance the competitiveness of local businesses.

IFC’s investment, the third in EDC since 2006, will help increase the company’s generation capacity of 1,199 megawatts, relieve power shortages in Mindanao, and avoid carbon dioxide emissions of up to 2.5 million tons per year.

According to IFC, the loan would also allow EDC to enhance its international operations.

“It will also enable EDC to offer its geothermal energy expertise to countries like Indonesia, Papua New Guinea and Chile,” it said.

IFC has helped bring about private sector investments in a reformed power sector that are seen as critical for the country’s economic growth.

The Philippines pays the highest electricity rates for residences in Asia at 18 cents per kilowatt-hour, and the second-highest rate for businesses in the region at 13 cents per kilowatt-hour.

Jesse Ang, IFC resident representative, said the investment recognizes that EDC harnesses energy from indigenous sources, which is a key advantage of geothermal power in the Philippines.

“This investment is consistent with IFC’s strategy to support low-carbon emission energy sources that ensure future energy needs are met in a sustainable manner, helping mitigate both global climate change and local environment concerns,” he said.

For his part, EDC chairman and CEO Federico M. Lopez said: “This investment builds upon an existing successful relationship between IFC and EDC, and will support our company’s medium-term capital expenditure program.”

“We want to strengthen EDC’s position as the largest geothermal energy developer in emerging markets, and as a company with a strong commitment to social and environmental standards.”

In support of the country’s comprehensive power-sector reform, IFC invested $49 million in EDC shares at its initial public offering in December 2006, to facilitate the company’s transition from being a government-owned and controlled corporation to a private company.

In November 2008, IFC committed a loan of P4.1 billion or $100 million to EDC in the company’s first long-term commercial loan without sovereign guarantee.

IFC is the largest development institution focused on the private sector in developing countries.