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| Calaca Power |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26635 |
| Company name | Emerald Energy Corporation |
| Country | Philippines |
| Sector | Utilities |
| Environmental category | B |
| Department | Infrastructure |
| Status | Pending Signing |
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| Date SPI disclosed | March 6, 2008 |
| Projected board date | April 15, 2008 |
| Previous Events | Approved: June 12, 2008 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
The Batangas Coal-fired Power plant (Batangas CPP) is a 600 MW power plant is located at Barangay San Rafael, Batangas, Calaca, approximately 115 km south of Metro Manila (island of Luzon). The Batangas CPP has two units of 300 MW each. Unit 1 and 2 commenced commercial operation on September 11, 1984 and July 15, 1995, respectively. The Batangas CPP is being privatized through an international competitive bidding process, as part of the privatization program under a comprehensive sector reform law, the Electric Power Industry Reform Act (EPIRA). The Batangas CPP is expected to run primarily as a merchant plant, selling electricity through the bid-based wholesale electricity spot market (WESM).
The proposed IFC investment of up to $150 million A Loan and $150 million B Loan will partly finance the privatization of the Batangas CPP. The winning bid of $786 million was tendered by Emerald Energy Corporation (Emerald) a subsidiary of Suez S.A. of France. In the coming three years, the plant will also undergo refurbishment works to improve its operational and environmental performance. |
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| Project sponsor and major shareholders of project company |
| Emerald is owned, by wholly owned subsidiaries of Suez S.A., which owns and operates 56,000 MW of installed capacity in the world, of which 8,489 MW is coal-fired. |
| Total project cost and amount and nature of IFC's investment |
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.
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. |
| Location of project and description of site |
| Batangas CPP is located by the shorelines of the Barangay San Rafael, Calaca, in the province of Batangas, approximately 115 km south of Metro Manila. It is bounded to the North by the Calaca/Balayan National Highway, to the East by the Cawong (Bolboc) river, to the West by the Dacanlao River, and to South by Balayan Bay. The plant site covers an area of approximately two million square meters. |
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| Anticipated development impact of the project |
The project is the second thermal power privatization project in the country and the second coal-fired merchant power plant to be financed internationally in East Asia. It has a high development impact, as it is expected to:
- Continue to support power sector reform by restoring market confidence in the WESM mechanism and the institutional capacity of the Philippines in general;
- Provide proof of concept and demonstration effect of a successful privatization of a large scale thermal merchant project to other East Asian countries who hesitate to embark in similar sector reforms;
- Improve the operational and environmental performance of the plant; and
- Introduce world’s best practice to turn around a public sector managed plant of below design capacity performance. |
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| IFC's expected development contribution |
IFC will play an important role in the project by:
- Supporting the success of the privatization of the Batangas CPP by sharing IFC’s extensive experience in investing in merchant power plants in the world;
- Providing long term, flexible financing structured to match project and sponsor’s needs;
- Leading the consortium of lenders and mobilizing additional bank lending; and
- Assisting in the implementation of environmental and social policies in line with international standards. |
| Environmental and social issues - Category B |
IFC's review of this investment identified the following issues:
- management systems and Action Plan to ensure compliance with GOP requirements and IFC’s Performance Standards within a reasonable timetable,
- labor and health and safety practices by the plant operator and subcontractors,
- control of air emissions and water discharges to GOP and IFC requirements,
- liability for past environmental contamination,
- coal supply and handling,
- ash disposal, emergency preparedness and protection of communities and ecosystems, and
- community relations.
None of the identified issues are expected to result in significant impacts, and this is a Category B project according to IFC’s Environment and Social Review Procedure because potential environmental or social impacts attributable to the private project are limited. |
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| For inquiries about the project, contact: |
Ramani Hariharan
Senior Vice President, Business Development
Suez Energy Asia Co., Ltd.
26th Floor, M Thai Tower,
All Seasons Place, 87 Wireless Rd.,
Lumpini, Pathumwan, Bangkok 10330, Thailand
Telephone: +66.2.253.64.66 (ext. 223)
Email: ramani.hariharan@suezenergymea.com |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
Ma. Clarissa P. Oben Evangelista
Romulo Mabanta Buenaventura Sayoc & De Los Angeles 30th Floor, Citibank Tower,
8741 Paseo de Roxas, Makati City,
Philippines
Tel. No. (632) 848 0114
Fax No. (632) 8103110
email: Clarissa.Evangelista@romulo.com |
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