US Bank-led group has $3B for renewable energy projs

A consortium of foreign banks led by the United States Bank Corp. expressed keen interest in bankrolling new and renewable energy projects in the Philippines including a proposed $2-billion to $3-billion coal liquefaction project.

"We are meeting the bank’s representatives in September to sign a memorandum of understanding. The funding will be available for both the government and the private sector. The bank also agreed that the credit window will not require a government guarantee," Energy Undersecretary Peter Anthony Abaya said over the weekend.

Abaya who was in Washington DC last June, said that the Philippines topped eight other countries jostling for US Bank Corp.’s funding assistance.

"We convinced the bank that the Philippines would be a viable place to put in alternative energy projects. They saw that we are capable of putting up facilities such as a liquefied natural gas (LNG) facility," he said.

Constructing an LNG terminal would cost $500 million to $1 billion, along with the installation of a gas pipeline.

Aside from US Bank Corp., some of the foreign financing institutions that are willing to fund LNG and compressed natural gas projects are the CitiBank Group, US Export-Import Bank, Overseas Private Investment Corp., and JP Morgan.

Foreign consultants such as the International Risk Consultants Inc. (IRC) and UEA Financials Inc. are also taking a second look at the Philippine energy sector.

Some of these banks already held initial talks with the DOE on prospective investments in wind power projects. The Philippines ranks second to the United States in terms of having the largest wind power capacity.

The US Bank Corp. is also closely looking at the proposed financing for the plan to convert the Philippines low-grade coal into fuel oil.

"If this project is a success, the Philippines can be the refinery hub for the expansion of coal to fuel source in Southeast Asia," Abaya said, adding that the potential sites for this facility include Bataan, Batangas or Cavite provinces.

A study on Philippine Coal conversion to crude oil, diesel and unleaded gasoline was recently completed by US technology firm Hydrocarbon Technology Innovations Group (HTIG) and the Headwaters Corp.

"The results are encouraging," said Abaya.

HTIG signed last February a memorandum of understanding (MOU) with the DOE for the establishment of a 50,000 barrel per day coal-to-fuels conversion facility in the country.

HTIG will establish in the Philippines a 25-kilogram per day pilot plant to study and determine the feasibility of converting the country’s indigenous coal to liquid fuel.

If feasible, commercial operations would start with the establishment of a 50,000-70,000 barrels per day fuel-producing plant.

The project, according to Abaya, will drastically cut the country’s dependence on expensive imported fuel costs as well as boost the use of indigenous coal which have long been considered as unsuitable for power plant use.

The country’s total coal reserves stand at 343.4 million metric tons (MT). Local coal production hit an all time high of 2.72 MMT last year, up by 34.3 percent the previous year of 2.03 MMT.

The market supply outlook in 2005 from production and importation of coal is 8.03 MMT, of which some 2.55 MMT will come from local coal production. Power and other industrial sectors are the bulk users of coal, with the power sector traditionally accounting about 80 percent.