CE Casecnan Power and Water Project

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This 150-MW project was negotiated by the Philippine National Irrigation administration just prior to the passage of the BOT law in May 1994. The Philippine government has guaranteed the offtake agreement for the project. 70% of water sales are contracted on a take-or-pay basis with the National Irrigation Administration. The project has been financed through both debt (75%) and equity (25%). Debt financing of approximately $300 million under Rule 144A includes $100 million senior secured A notes with a 9-year maturity; $181 million senior secured B notes with a 14-year maturity; and $75 million floating rate notes with a 6-year maturity. Equity financing totaling $119 million includes $83 million by California Energy (CalEnergy); $15 million by Peter Kiewit; and $15 million by private Philippine investors. The turnkey construction contract has been awarded to the following firms: Siemens, Sulzer Hydro, Black & Veatch, Colenco Power Engineering, Murstori Cementisti CMC di Ravenna and Impressa Pizzarotti & C. Spa. The project entered commercial operation on Dec. 21, 2001. In August 2002, CalEnergy filed the arbitration case to force the government to pay US$131.65 million as reimbursement for taxes it paid for the construction of the irrigation and hydroelectric infrastructure in Central Luzon. In October of 2003, the government closed a deal with California Energy Casecnan Water and Co., Inc. that resulted in savings of about US$1 billion for the state and ending the dispute as well as the government's threat of contract cancellation.