CBK project financier seeks meeting with Napocor, CBK Power

Global financial institution Societe Generale is requesting a meeting with officials of the National Power Corp. (Napocor) and CBK Power Corp. regarding the issuance of a government acknowledgment and consent agreement by the Department of Finance (DOF).

The said DOF agreement will pave the way for the release of a $520.8-million financing for the Caliraya-Botocan-Kalayaan hydropower project, including a $70.8-million interest-free loan or "security deposit."

In a letter dated Dec. 18, 2000 and addressed to CBK Power Corp., holder of the build-rehabilitate-operate-transfer (BROT) contract, Societe Generale expressed concern and confusion over delays in the project.

"We are unable to understand the cause of this delay. What we understand is the importance of the project to the Philippine government. We are requesting a meeting with Napocor and CBK Power Corp. officials," said Ashley Wilkins and David Gore, Societe Generale managing director and director for project finance, respectively.

The global financial institution said the meeting would be held "to understand the causes of delay in obtaining this (DOF) consent and to resolve any remaining issues so that the important project for the Philippine government and economy can proceed without delay."

The official communique was addressed to Guillermo Rossi, managing director for finance of CBK Power, with a copy furnished to Napocor president Federico E. Puno.

The government consent is an official recognition of the CBK project and the BROT contract, including the ability of CBK Corp. to raise the necessary funds to undertake the project.

It is crucial for the project proponents as it would assure the 18 international creditor banks the viability of the project and the affirmation of the Philippine government to the BROT contract.

Local representatives of some of its international creditors have expressed dismay at the delays caused by Philippine government, which ironically will be the beneficiaries of the hydropower project.

Hydropower is one of the cheapest sources of energy anywhere in the world, and is classified under the new and renewable energy (NRE) sources, which is the priority of the Department of Energy (DOE).

CBK Power is a joint venture between Edison Mission Energy of the US and Industrias Metalurgicas Pescarmona SA (Impsa) Ltd. of Argentina. Impsa won the BROT contract more than four years ago.

CBK Power and Napocor signed last October the second accession undertaking, which allows the former to enter into a 50-50 partnership with Edison Mission.

The BROT contract was terminated last June after CBK Power failed to present the financial closing as well as file the security deposit. However, the contract provides for a dispute settlement period or a final condition, which calls for the direct negotiations between the Napocor president and the CBK Power chief executive officer.

Aside from the signing of the government consent, a right-of-way (ROW) case remains in the civilian courts although it has nothing to do with the financial closing.

CBK Power will expand the present capacity of 230-megawatts (MW) to 750-MW by year 2002 utilizing a total of three power units.