Firms back creation of state guarantee agency for power projects

MANILA, Philippines — The tandem of local firm H&WB Asia Pacific (Pte Ltd) Corp. and French energy development firm Sabella SAS is urging government to push through with plans to create a single state-run guarantee agency to ensure the development of big power investments.

The government’s plan to establish a single government guarantee system, which was endorsed in October by the Governance Commission for Government-Owned or -Controlled Corporations for President Duterte’s approval, will bolster the chances of projects getting international funding.

Such projects that would need strong financial support includes the San Bernardino Ocean Power Corp. (SBOPC) which is building a $25-million pilot phase of an ocean tidal power plant in San Bernardino Strait, envisioned to be the first in the Philippines and the ASEAN region, H&WB Asia Pacific (Pte Ltd) Corp. president Antonio Ver said in a statement.

SBOPC is the special purpose company of H&WB and Sabella for an ocean power plant project aimed to boost the renewable energy portfolio of the country.

“Ocean power needs strong government support. The kinetic energy of tidal currents produces stable electricity supply. This is real ‘grid smart’ technology because it can provide steady ancillary service supporting the transmission of electricity from generation to customers up to far-flung areas,” Ver said.

The ocean tidal power project was shortlisted last May for possible financing under the fifth funding cycle of the International Renewable Energy Agency/Abu Dhabi Fund for Development (IRENA/ADFD).

However, ADFD requires a government guarantee letter and eventually a guarantee agreement for loan applicants that are private entities such as SBOPC.

“The ADFD loan facility is an effective financing strategy for the San Bernardino ocean power plant and securing the funding will certainly accelerate the construction and development phases of the project and jumpstart the development of ocean energy,” Ver said.

Earlier, Finance Secretary Carlos Dominguez said the country would be in a better position to finance developmental projects by the private sector by integrating the four guarantee agencies.

The government is consolidating Philippine Export-Import Credit Agency (PhilEXIM) with other government guarantee corporations, including the Small Business Corp., Quedan and Rural Guarantee Corp. and the Home Guarantee Corp. by 2018.

Ver said the power project is a “scalable proof of concept” that would allow ramping up tidal in-stream energy conversion (TISEC) technology, an ocean power technology mostly adaptable, or the technology-of-choice, in Philippines waters.

The capacity of the tidal farm is scalable to 3 MW with a 1-MW storage to electrify Calintaan and Matnog in Sorsogon that have a demand of up to 20 MW for the next three years.

Northern Samar Electric Cooperative (Norsamelco) will be the off-taker for the initial capacity of the power plant.

San Bernardino Strait’s tidal currents have a 500-MW potential.  Tidal currents are predictable, and produce massive kinetic energy to run marine turbines.

Last January, H&WB and Sabella signed a memorandum of understanding with PNOC RC on the former’s three service contracts from the DOE.

Awarded in October 2013, the service contracts cover three concession areas namely: Area 1 – San Bernardino Strait between Bicol Peninsula and Samar Leyte Corridor (2,025 hectares); Area 2 – San Bernardino Strait between Bicol Peninsula and Samar Leyte Corridor (2,025 hectares); Area 3 – San Bernardino Strait between Bicol Peninsula and Samar Leyte Corridor (1,863 hectares).

These contracts are located in San Bernardino Strait between Matnog, in the province of Sorsogon, and Capul and Dalupiri in Leyte.