Bakun River Power Plant

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This 70-MW hydro power plant was located on the Bakun River in the Benguet and Illocos Sur provinces in Luzon. The project consisted of two 35-MW facilities. This was the first private hydroelectric BOT project in the Philippines. The project began construction in March 1997, and consisted of 3 dams: Bakun A, Bakun B and Bakun C. Construction was expected to reach completion in August of 2000. All electricity generated by the plant was to be sold to Napocor under a 25 year take-or-pay contract. Napocor guaranteed payment for all electricity available in US dollars. The government also granted the project a six year tax holiday. The project company was Luzon Hydro Corp. which was a joint venture of the Philippines' Aboitiz Equity Ventures (50%), and Australian Pacific Hydro Ltd. (50%). Pacific Hydro was in turn a joint venture between the Development Australia Fund and AEP Resources Australia (a subsidiary of American Electric Power). Transfield Construction was the turnkey contractor. The project reached financial closure in May 1997. The project was financed through both equity, in the amount of US$15 milion, and debt in three loans over 10 years totalling US$168 million. Debt financing was provided by Philippines National Bank, AB Capital Investment, SolidBank, and ING Bank. Bakun River Power Plant was the first Philippine hydro project locally financed. The first financing tranched consisted of US$45 million, the second tranche was US$105 million, and the third tranche was US$18 million. The primary financing instrument was an LC relying on the sponsors' credit risk. Bank America Asia (Hong Kong) served as financial advisor. In July 2004, Luzon Hydro Corporation commenced construction of a US$10 million expansion of Bakun AC Hydro project (which was orignally estimated to cost US$24 million). The expansion involved tunnelling works for the Bakun Supplemental Hydro Project. Upon completion, the Bakun AC Power Plant was to increase generation by approximately 50 gigawatt hours per annum (from an existing base of 230 GWh per annum). The additional electricity was to be sold to the existing off-taker, Napocor. The project was due for completion in mid-2005. In May 2011, Aboitiz Renewables Inc., acquired the remaining 50% stake in the Bakun Hydropower facility for US$ 30 million, effectively giving the company full ownership of the facility.