26405 - Masinloc Power Partners Co., Ltd

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Summary of Proposed Investment

Project Number

26405

Company Name

MASINLOC POWER PARTNERS CO. LTD.

Date SPI Disclosed

Oct 9, 2007

Country

Philippines

Industry

Infrastructure

Projected Board Date

Nov 15, 2007

Status

Completed

Sector

Coal - Thermal Power Generation

Department

Regional Industry - INF Asia & Pac

Environmental Category

B - Limited

Previous Events

Approved : Nov 8, 2007
Signed : Feb 15, 2008
Invested : Apr 14, 2008

Project Description

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.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	250.0
Equity	25.0

Development Impact

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 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.

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.

Contacts

For Inquiries About the Project, Contact

Mr. Rohit C. Gokhale, Director, Business Development,
E-mail: rohit.gokhale@AES.com

Flora Zhao, Project Director, Business Development
E-mail: flora.zhao@aes.com

AES Asia & Middle East
The Enterprise Centre
28F Tower 2, 6766 Ayala Ave. cor.
Paseo de Roxas, Makati City 1226
Philippines
Telephone: +63-2-849-3447

For Inquiries and Comments About IFC, Contact

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IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

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. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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