Napocor taps $400-M loan facility

The National Power Corp. (Napocor) has tapped a $400-million loan facility for its $650-million transmission interconnection and reinforcement project (TIRP).

The loan will be unwritten by The Industrial Bank of Japan, Sumitomo Bank, Fuji Bank Ltd., Citibank NA, Societe Generale Asia Ltd., Credit Agricole Indosuez, ING Barings, and DKB Asia Ltd. The loan will be guaranteed by the national government and the ADB through the Asian Currency Crisis Support Facility (ACCSF).

According to Napocor vice president Merlita M. Pajarillo, the loan will be used to finance the TIRP which involves among others the Leyte-Mindanao interconnection project. The interconnection project will allow sharing of power reserves between the Luzon and Mindanao grids.

Pajarillo added that the multi-million dollar project likewise involves the Luzon transmission line upgrading that will rehabilitate Napocor’s 230-kilovolt transmission network in Southern and Northern Luzon.

Napocor has issued a conditional mandate to the eight investment institutions to jointly lead arrange the loan on a fully underwritten basis.

Napocor officials said it would be noteworthy to state that the underwriters want several conditions to be undertaken prior to the release of the loan. Some of these conditions are the passage into law of the Power Reform bill, the approval by the ADB of the $100-million direct loan, and the ACCSF-backed guarantee, as well as approvals by the Bangko Sentral ng Pilipinas BSP and the Department of Finance (DOF).

Also involved in the TIRP is the Mindanao substation expansion that will install additional power transformers and circuit breakers in seven substations in Mindanao. Furthermore, it will help finance the power trading and pooling system development or the software and computer hardware needed for the electricity pool market that is envisioned to start operating when the industry is restructured.

The TIRP project will be partly funded with a $100-million loan from the Asian Development Bank (ADB); $100 million from a direct loan with the Japan Bank for International Cooperation (JBIC); and $350 million from either a bond float or international loan syndicate but guaranteed by the ADB.

Earlier, Napocor president Federico E. Puno said $80 million to $100 million will be the local counterpart fund while the remaining amount would be sourced from the international institutions.