Masinloc Coal-Fired Thermal Power Plant

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Power Sector Assets and Liabilities Management Corporation (PSALM), an agency of the Philippines’ government, fully divested the 600 MW Masinloc Coal-Fired Thermal Power Plant, to Masinloc Power Partners Co. Ltd. The plant was expected to run primarily as a merchant plant, selling electricity through the bid-based wholesale electricity spot market (WESM). The coal-fired plant was located at Masinloc, in Zambales province, Central Luzon region. The divestiture was part of the government’s privatization program, which was laid out in a comprehensive sector reform law, the Electric Power Industry Reform Act (EPIRA) of 2001. Under this act, PSALM was mandated to divest 70% of the generation assets of the state-owned National Power Corporation (Napocor). The plant was divested by means of a competitive bidding process. Following an auction in which six private groups submitted bids for the acquisition of the power plant, Masinloc Power Partners Co. was chosen as preferred bidder on 26 July, 2007, with a bid of US$930 million. The other bidders were: First Gen Luzon Power Corp; Masinloc Consolidated Power Inc., a joint venture of Ranhill Bhd of Malaysia and A. Brown Co. Inc. of the Philippines ; Masinloc Holdco Inc. a wholly owned entity of Suez-Tractebel S.A.; Anglo Cayman Energy Development Co., an affiliate of China Shenhua Energy Co; and International Power Masinloc Holdings Inc., a subsidiary of International Power plc. of the United Kingdom. The winning bidder, Masinloc Power Partners Co. was a limited liability partnership owned by wholly-owned subsidiaries of AES Corporation. IFC subsequently purchased an 8% equity share in the project company. On Feb. 15, 2008, AES Corp. reached financial closure on four tranches of financing: a syndicated 10-year term loan of US$195 million provided by ING Bank (US$25 million), Rizal Commercial Bank Corp (US$50 million), Security Bank Corp (US$50 million) and Bank of the Philippine Islands (US$70 million); a US$35 million working capital credit facility provided by the same syndicate; a US$240 million, 18-year A loan from IFC; and a US$200 million, 15-year term loan provided by ADB. Including equity commitments from AES and IFC, this amounted to a total project cost of US$1,057 million. In April 2008, AES Corp. formally took over the operations of the Masinloc power plant by making a single lump-sum payment of US$930 million, equal to the entire bid price. At the same time, AES was considering expanding the capacity of the plant by an additional 600 MW.

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