ADB extends $20-M loan to EDC’s Burgos wind farm

MANILA, Philippines - The Asian Development Bank (ADB) has signed a financing assignment agreement of up to $20 million with EDC Burgos Wind Power Corp. (EBWPC), Eksport Kredit Fonden, and a syndicate of international commercial banks to support development of the largest wind farm in the Philippines.

ADB’s Private Sector Operations Department director Christopher Thieme said the Burgos wind farm is a major contributor to the government’s drive to scale up renewable energy use and to reduce its reliance on coal and petroleum for power generation.

“The operation of this farm will avoid the production of over 200,000 tons of carbon dioxide equivalent emissions a year, making it a sustainable energy source for the country,” Thieme said in a statement.

The $315-million, 150-megawatt (MW) Burgos wind farm, which is situated in the northern province of Ilocos Norte on the main island of Luzon, was completed in November 2014 and is owned and operated by the EBWPC.

EBWPC is a special purpose vehicle (SPV) company controlled by Energy Development Corp. (EDC), a publicly listed firm. EDC is the largest geothermal energy producer in the Philippines and the largest integrated steam and geothermal energy producer in the world.

EDC issued a disclosure yesterday to the country’s stock exchange regarding the loan.

The firm said the Burgos lenders agreed to proportionately assign to ADB a portion of the ECA Debt Facility and the US dollar Commercial Debt Facility of Australia and New Zealand Banking Group Limited, DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main, Hong Kong branch, ING Bank, a branch of ING DiBa AG, ING Bank, N.V., Singapore branch and Norddeustche Landesbank Girozentrale, Singapore branch.

“Indeed, the support of our lenders, which now include ADB, is another testament that Burgos is a world class project, adhering to the high standards of multi-lateral funding organizations.” EDC president and COO Richard Tantoco said.

ADB decided to invest in the project because of EDC’s successful track record in financing, constructing, owning and operating renewable energy projects in the Philippines, as well as the high potential for energy generation at the target site in Ilocos Norte.

Likewise, the Manila-based multilateral funding agency favored the contribution the farm would make to the government’s drive to diversify its fuel mix and to meet rising power demand without the use of fossil fuel generation plants.

Earlier, EDC signed a $315-million financing agreement with a group of foreign and local banks for the wind farm project in Ilocos Norte.  The facility, which consists of US dollar and Philippine peso tranches, will mature in 15 years.

Eksport Kredit Fonden, Denmark’s export credit agency, guaranteed a part of the dollar loan component.

The mandated lead arrangers for the foreign tranche are Australia and New Zealand Banking Group Ltd. (ANZ), DZ Bank AG, ING Bank NV, Malayan Banking Berhad (Maybank) and Norddeutsche Landesbank Gironzentrale.

Meanwhile, PNB Capital and Investment Corp. and SB Capital Investment Corp. are the local arrangers among a syndicate of domestic lenders, namely BDO Unibank Inc., Land Bank of the Philippines, Philippine National Bank, and Security Bank Corp.

The ADB pointed out the Philippines is making a concerted push to build up its renewable energy sector with the goal of cutting its heavy dependence on fossil fuels for electricity generation.

The country’s untapped renewable energy resources are estimated at about 250,000 MW and the Department of Energy is targeting about 2,870 MW of additional installed capacity from these sources by 2030. The wind farm will provide a shot in the arm to the government’s push to diversify its energy sources and reduce harmful greenhouse gas emissions.