Announcement of Nine Hundred and Thiry-Three Million US Dollars Financing Package for Hopewell-Philippine Plant Sets Precedent for Private Sector Power Projects on April 29, 1993

$933 MILLION FINANCING PACKAGE FOR HOPEWELL/PHILIPPINE PLANT SETS PRECEDENT FOR PRIVATE SECTOR POWER PROJECTS WASHINGTON, D.C., April 29 -- Project financing for the US$933 million, 700-megawatt Pagbilao Power Plant in the Philippines is unprecedented in the power sector in developing countries, according to Vijay Chaudhry, power division manager of the International Finance Corporation (IFC). The financing deal for the Hopewell plant was arranged by IFC and signed this week in Hong Kong. It represents the first time that limited recourse co-financing without government guarantees has been provided for a very large power project in the developing world by the Export-Import Bank of Japan and the Export- Import Bank of the United States. These banks are the main sources of finance for the project, along with IFC and other financial institutions. "The availability of export credits without guarantees from host country governments will be critical in expanding the private sector's role in the power sector," Chaudhry said. Pagbilao will be the largest coal-fired thermal power plant in the Philippines and one of the biggest Build-Operate-Transfer (BOT) electricity-generating plants in the developing world. Hopewell Power (Philippines) Corp. will build the plant and operate it for 25 years, after which it will be turned over to the Philippines National Power Corporation. The plant will increase electricity generating capacity in the Philippines, which has been crippled by daily power blackouts of up to 10 hours in Manila and major cities in Luzon. "This can serve as a viable financing model for other power projects, both in the Philippines and other developing countries," said IFC investment officer Dalip Pathak. Within the financing package IFC will provide US$10 million in equity and lend US$60 million for its own account, with up to US$40 million more to be syndicated with commercial banks. IFC acted as overall financial advisor to Hopewell Power (Philippines) Corp., which is a subsidiary of Hopewell Holdings Ltd., a holding company based in Hong Kong that has been a pioneer in developing infrastructure projects in Asia on a BOT basis. IFC is a member of the World Bank Group and the largest source of equity and loan financing for private sector projects in developing countries. (30) IBRD IDA IFC MIGA ICSID