Kepco taps Korean Eximbank for Naga coal power plant project

Kepco Philippines Corp. (Kephilco) has tapped the Export-Import Bank of Korea to finance a large portion of the cost for the construction of the 200-megawatt (MW) coal-fired power plant in Naga, Cebu, a ranking company official said.

Kephilco general manager for business development Rolando Bacani said the $200-million project will be financed through a combination of equity and loan.

The loan component of the financing requirement for the project, he said, would likely be done through a syndicated loan where bulk will come from Korea Eximbank.

Korea Eximbank is an official export credit agency providing comprehensive export credit and project finance to support Korean enterprises in conducting business internationally. Since its establishment in 1976, the bank has endeavored to facilitate the development of the national economy and enhance economic cooperation with foreign countries as a financial catalyst.

The company has commissioned Citibank N.A. as the financial advisor for the loan exercise.

Last week, Kephilco and its partner Salcon Power Corp. signed a memorandum of agreement (MOA) with the National Power Corp. (Napocor) and the National Transmission Corp. (TransCo) to ensure the smooth implementation of the project.

"It’s a cooperative agreement wherein TransCo will provide ancillary services to the power facility. Kepco wants to ensure that they will have steady transmission line before the project starts," TransCo president Alan T. Ortiz said.

Napocor, on the other hand, will extend assistance in looking for off-takers for the merchant plant.

"All help will be extended by the signatories in the MOA on a needed basis," Bacani pointed out.

Bacani said the MOA will provide some level of confidence to Kepco to start the project.

The project is expected to start this October and will be operational in three years time or by 2009, in time for the surge in demand in the Visayas.

Visayas has a dependable capacity of 1,020 megawatts with peak demand at 960 MW.