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Masinloc Power Partners Co., Ltd
Summary of Proposed Investment
This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.
MASINLOC POWER PARTNERS CO LTD
Coal - Thermal Power Generation
Date SPI disclosed
October 9, 2007
Projected board date
November 15, 2007
Invested: April 14, 2008
Signed: February 15, 2008
Approved: November 8, 2007
View Environmental & Social Review Summary (ESRS),
The Masinloc Coal-fired Power plant (Masinloc CPP) is a 600MW power plant, located in Masinloc, province of Zambales (Island of Luzon), which has been operational since 1998. The Masinloc CPP is being privatized through an international competitive bidding process, as part of the privatization program under a comprehensive sector reform law, the Electric Power Industry Reform Act (EPIRA). The Masinloc CPP is expected to run primarily as a merchant plant, selling electricity through the bid-based wholesale electricity spot market (WESM).
The proposed IFC investment of up to $275 million A Loan and equity will partly finance the privatization of the Masinloc CPP. The winning bid of $930 million was tendered by Masinloc Power Partners Co. Ltd (MPPC) a subsidiary of The AES Corporation of the US. In the coming three years, the plant will also undergo refurbishment works to improve its operational and environmental performance.
Project sponsor and major shareholders of project company
Masinloc Power Partners Co., Ltd. (MPP), a limited liability partnership, is owned, by wholly owned subsidiaries of The AES Corporation (AES), a leading US headquartered global power developer and operator in the world. The AES Corporation is listed on NYSE under the symbol of “AES”. AES has 13 regulated utilities and 121 generation facilities, with total generation capacity of around 43,000MW.
Project is currently 100% owned by the AES Corporation, through wholly owned subsidiaries. AES intends to sell portion of the equity and introduce a minority partner in MPP very close to the financial closure.
Total project cost and amount and nature of IFC's investment
The total project cost is estimated at approximately $ 1.1 billion, which includes the privatization bid acquisition price, funding for the debt service reserve account, transaction costs, refurbishment works and initial working capital needs.
The IFC investment amounts to up to $275 million consisting of an A Loan and equity both for IFC’s own account.
IFC investment as approved by Board
275 million (USD)
IFC Investment (million USD)
* These investment figures are indicative
Location of project and description of site
The project is located in Masinloc, province of Zambales, in the north of Luzon about 250 km northwest of Manila. The project site is located along the coast and covers an area of approximately 1.4 Million m2.
Anticipated development impact of the project
The project is the first thermal power privatization project in the country and the first coal-fired merchant power plant to be financed internationally in East Asia. It has a high development impact, as it is expected to:
- Reinvigorate foreign investors interest in the country’s power privatization program after several years of inertia;
- Continue to support power sector reform by restoring market confidence in the WESM mechanism and the institutional capacity of the Philippines in general;
- Provide proof of concept and demonstration effect of a successful privatization of a large scale thermal merchant project to other East Asian countries who hesitate to embark in similar sector reforms;
- Improve the operational and environmental performance of the plant; and
- Introduce world’s best practice to turn around a public sector managed plant of below design capacity performance.
IFC's expected development contribution
IFC will play an important role in the project by:
- Supporting the success of the privatization of the Masinloc CPP by sharing IFC’s extensive experience in investing in merchant power plants in the world;
- Providing long term, flexible financing structured to match project and sponsor’s needs;
- Leading the consortium of lenders and mobilizing additional bank lending; and
- assisting in the implementation of environmental and social policies in line with international standards.
Environmental and social issues - Category B
The project is the post-privatization financing of an existing coal-fired power plant that has been in operation since 1998. Environmental, social, health and safety issues associated with the project include management systems and Action Plan to ensure compliance with GOP requirements and IFC’s Performance Standards within a reasonable timetable. The project sponsor has commissioned an environmental due diligence audit and a technical condition assessment of the plant to assist in planning necessary equipment and procedural upgrades; key elements of the upgrade program will be part of an Action Plan to be agreed with IFC.
For inquiries about the project, contact:
Mr. Rohit C. Gokhale, Director, Business Development,
Flora Zhao, Project Director, Business Development
AES Asia & Middle East
The Enterprise Centre
28F Tower 2, 6766 Ayala Ave. cor.
Paseo de Roxas, Makati City 1226
For inquiries and comments about IFC, contact:
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
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