Japan Bank for International Cooperation (JBIC) has signed a loan agreement totalling US$100mn with CBK Netherlands Holdings (CBKNH), in which Electric Power Development (J-Power) and Sumitomo Corporation have joint equity stakes.
The loan was cofinanced with private financial institutions. Mizuho Corporate Bank was agent bank. Political risk coverage for the cofinanced portion was also provided in the form of a guarantee by JBIC.
This project finance loan was provided to support CBKN’s participation in the CBK Power Project (total power capacity of 728MW), located in Laguna Province, Philippines, through the acquisition of the concession for this project.
The CBK Power Project is being undertaken by CBK Power Company, which was set up by IMPSA of Argentina and Edison Mission Energy of the US, and consists of constructing and rehabilitating the Caliraya, Botocan and Kalayaan power plants and selling the electric power produced at the three plants to the National Power Corporation for a period of 25 years.
The work on all three power plants was completed in 2004, and they are now operating successfully. These plants have been instrumental in providing a stable power supply for Luzon Island, the centre of the Philippines’ economic activities.
J-Power and Sumitomo Corporation jointly own whole stakes in CBK Power Company through CBKNH and are planning to engage in the long-term operation and management of the project.
In recent years, there has been an increasing number of business transactions to acquire concessions for overseas IPP projects as US and European IPP project developers scale back their overseas operations.
Japanese firms are regarding this development as a new business opportunity. This is the first project finance loan JBIC has provided to support Japanese firms in the acquisition of a concession for an existing IPP project as well as participation in its operation.
It is expected that such financial support will help Japanese firms take advantage of new business opportunities in respect to overseas IPP projects, while serving to ensure a stable supply of power in the Philippines through the participation of Japanese firms with advanced technology in power projects.