Ann Pasco
Phone: + 202 473 9167- Fax: + 202 974 4384
E-mail: apasco@ifc.org


Washington D.C., May 30, 2003—The International Finance Corporation, the private sector arm of the World Bank Group, and Cagayan Electric Power and Light Company, Inc. have agreed to finance a $5.4 million solar photovoltaic power project in the Philippines with partial funding from the Global Environment Facility. A new plant on the island of Mindinao will be combined with the existing Bubanawan hydroelectric plant in the first full-scale demonstration of the environmental and economic benefits of combining hydro- and photovoltaic-based power.

The GEF, which funds innovative applications of renewable energy technologies, will provide a $4 million forgivable loan through IFC, with CEPALCO contributing the remainder as equity. The 950 kilowatt project will be the largest distributed, grid-connected photovoltaic installation in the developing world. Sumitomo Corporation of Japan is the turnkey contractor for the project, and the solar modules are being manufactured by Sharp Corporation of Japan.

The project, expected to become operational in 2004, has an innovative structure, with IFC/GEF financing a loan that converts to a grant after five years of operation if certain conditions are met. “IFC is proud to be associated with this path-breaking renewable energy project,” said Gavin Murray, IFC director of Environment and Social Development. He added, “This financing structure provides a model for donor-assisted projects by promoting timely execution and operation of the project through the adoption of project financing discipline.” Mohamed T. El-Ashry, chief executive officer and chairman of the GEF, said, “This project represents GEF’s initial foray into supporting large-scale photovoltaic applications, which can ultimately reduce costs and improve performance.”

CEPALCO is the third largest electric distribution utility in the Philippines. It is a private, investor-owned utility with a peak load of about 80 megawatts. CEPALCO holds the power distribution license for a coastal region on Mindanao reaching from the city of Cagayan de Oro in the west to the town of Jasaan in the northeast. As of December 2001, CEPALCO had 302 employees and assets valued at $47 million. “We are very excited to be a part of this pioneering project, and look forward to moving towards a future with cleaner and more environmentally sustainable generating technologies,” said Mr. Ramon C. Abaya, Chairman of CEPALCO. Mr. Javed Hamid, director of the East Asia and Pacific Region for IFC, added, "IFC is very pleased to work with CEPALCO on this innovative project and is looking forward to using this as a demonstration project for other similar projects in the future."

The Global Environment Facility helps developing countries fund projects and programs that protect the global environment. Established in 1991, GEF is the designated financial mechanism for international agreements on biodiversity, climate change, and persistent organic pollutants. GEF also supports projects that combat desertification and protect international waters and the ozone layer. The activities of the GEF, funded by member countries, are largely implemented through the World Bank, UNDP, and UNEP. IFC acts as a private sector interface for the GEF, operating through the World Bank as a GEF implementing agency. To date IFC has developed $125 million of GEF-eligible projects.

The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications