ADB to finalize $1-billion RE loan program for Philippines by mid-2011

SINGAPORE – The Asian Development Bank (ADB) and the Philippine government are expected to finalize a $1-billion renewable energy (RE) and energy efficiency loan program by the middle of next year.

ADB principal planning and coordination specialist Samuel Tumiwa told Philippine energy reporters on the sidelines of the Clean Energy Expo 2010 here that negotiations are ongoing to structure the loan at 20 years maturity and eight years grace period.

“We’re in the design and negotiation stage with the (Philippine) government now. The loan will be approved in the middle of next year, and implementation should take about four years,” Tumiwa said. “Usually an ADB loan takes three to four years to complete. It looks like the target is for the loan to be approved in the middle of next year.”

According to the ADB official, most of the $1-billion loan will be focused on supporting solar, wind and biomass power projects.

“For the Clean Trust Fund (CTF) in the Philippines, what we are really focusing on is scaling up the use of solar energy. We’re going use about 125 million CTF money for solar, at 0.25 percent interest for 40 years. We have a loan that we’re doing right now, which we would be doing next year for a billion dollar, for renewable energy and energy efficiency. How much of that will go to solar, we’re still discussing with the Department of Energy (DOE) and the Department of Finance (DOF),” he said.

On top of the $1-billion loan, the Philippines also received $250 million the CTF, half of which will go to solar power projects.

ADB deputy director general for regional and sustainable development department Woo Chong Um, for his part, said they are open to the Philippine government’s plan to extend the tenure of its loans.

“That’s what we are trying to do now, to have longer-term financing,” he said, noting that existing seven-to-eight year loans could be extended up to 20 years or longer.

Um said this would be beneficial as this would allow the Philippine government more leeway in managing its financing requirements.

The ADB has announced a range of initiatives to bring down barrier such as price and policy issues that prevent the wide-scale adoption of low-carbon and clean-energy technologies in the Asia and Pacific region.

These include ADB’s Asia Solar Energy Initiative (ASEI) that aims to identify and develop large capacity solar projects that will generate 3,000 megawatts (MW) of solar power by 2012.

In 2009, the ADB approved a total of $1.6 billion in financing operations through loans, grants, guarantees, a trade finance facilitation program, equity investments, and technical assistance projects to the Philippines. It also mobilized co-financing amounting to $3.2 billion.