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June 22, 2024

BDO and BPI extend P20 Billion loans for hydroelectric power plant project

First Gen Corp. has secured a P20-billion loan from local financial institutions to fund its recent acquisition of the 165-megawatt (MW) Casecnan Hydroelectric Power Plant (CHEPP).

The power firm, led by the Lopez Group, formalized term-loan agreements with BDO Unibank Inc. and the Bank of the Philippine Islands (BPI).

FGen, in a disclosure to the Philippine Stock Exchange, stated that the funds procured from the loans will be utilized to support the growth initiatives of First Gen, including the acquisition of the 165-MW CHEPP, and for general corporate requirements.

Located in Barangay Villarica, Pantabangan, Nueva Ecija, the CHEPP is a run-of-river power facility with limited impounding.

On May 26, 2023, FGen subsidiary Fresh River Lakes Corp. (FRLC) was declared the successful bidder for the CHEPP by the Power Sector Assets and Liabilities Management Corp. (Psalm).

“We are honored and grateful for the confidence that the lender placed in the company,” stated FGen CFO Emmanuel Antonio P. Singson. “The fresh financing will be used to fund the acquisition of CHEPP, which is vital to our transition towards a decarbonized and regenerative future.”

BDO expressed its commitment to providing access to capital for renewable energy projects, considering it a priority sector in financing, according to Charles M. Rodriguez, executive vice president and group head for institutional banking at BDO.

Meanwhile, BPI’s Executive Vice President and Institutional Banking Head, Juan Carlos Syquia, emphasized, “We are glad to have done so by providing [FGen] with more innovative financial solutions.”

FGen President Francis Giles B. Puno highlighted the strategic importance of CHEPP, noting its connection to the company’s existing hydro assets—132MW Pantabangan-Masiway and the 120MW Aya pumped-storage hydro—both located in Pantabangan, Nueva Ecija.

Puno explained, “Right now, when you look at Casecnan, fundamentally it’s a very important asset for us because we obviously have Pantabangan-Masiway there.”

He further elaborated on the plans for project Aya and the significance of controlling the reservoir, especially since Casecnan is upstream. “It also enables us to build out solar and wind as well because those are also intermittent. If we add it up, we create an RE portfolio.”

FGen Chairman Federico R. Lopez emphasized that all of the company’s renewable energy assets are crucial to achieving a decarbonized energy system. “Assets like that are very hard to replicate and they’re all in tune to where the world is headed with regards to a decarbonized energy system.”

The bid offer of $526 million by FRLC exceeded the $227.27 million minimum bid price set by the Psalm for the CHEPP acquisition.

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