WB sets up $44 M fund for electric cooperatives

MANILA, Philippines - The World Bank is setting aside $44 million to help electric cooperatives (ECs) in the Philippines access financing for their network expansion and renewable energy projects, a ranking official said.

In an interview, World Bank senior energy specialist Alan Townsend said the multilateral funding agency is providing the cooperatives $44 million in a guarantee fund that would help them access loans from commercial banks.

The guarantee fund from the World Bank’s Clean Technology Fund (CTF), a climate investment fund, would support the existing Electric Cooperative Partial Credit Guarantee Program (ECPCGP) of the Department of Energy, which guarantees electric cooperatives’ loans from commercial banks.

“That will help support $500 million in lending to ECs for network expansion and renewable energy projects,” Townsend told reporters.

The additional support from the World Bank would help ECs with their investment projects.

“ECs have big investment needs. They provide power to more than 50 percent of all the households in the country. They are regulated on a non-profit basis so they have very limited margins. Government policies have shifted the primary financing responsibilities for ECs from the National Electrification Administration (NEA) to the private sector. They want commercial finance to become a more important factor in funding new investment for ECs,” Townsend explained.

He said with the additional $44 million from the World Bank, investments of ECs could translate to about $100 million, particular for their network expansion and renewable energy projects.

Townsend said the guarantee fund has no liability on the part of the government in the program.

 â€œThere’s no contingent liability. If there’s a payout, the CTF will have a right of recovery but not from the government but from the EC,” he said.

At present, the ECPCGP provides partial credit guarantees to commercial banks that lend to electric cooperatives.

“This has been very successful in helping commercial banks such as BPI and Security Bank provide credit to ECs,” Townsend said

Under the program, when electric cooperatives repay the loan, they’ll pay the principle and interest to the bank and pay the guarantee fee to the ECPCGPs.

For the additional $44 million, Townsend said this is just awaiting approval from the Philippine government and the World Bank board.