Improving Financing Access of LGUs to Energy Projects: Financing Options and Facilities 6 September 2013 NG-LGU Joint Energy Forum Alfonso L. Salcedo, Jr. Executive Vice President and Group Head Corporate and Investment Banking Group
Dec 05, 2015
Improving Financing Access of LGUs to Energy Projects: Financing Options and Facilities 6 September 2013 NG-LGU Joint Energy Forum
Alfonso L. Salcedo, Jr. Executive Vice President and Group Head Corporate and Investment Banking Group
I. Available Bank Financing to Local Government Units (LGU) II. The Role of LGU Guarantee Corporation (LGUGC)
III. BPI-LGUGC Working Relationship
IV. BPI Financing to LGUs
V. Financing Options
VI. Making Your Energy Projects Bankable
Presentation Outline
NG-LGU Joint Energy Forum
Government Banks
• Development Bank of the Philippines
• Land Bank of the Philippines
Private Commercial Banks
• All Bankers Association of the Philippines (BAP) member banks (34 members)
• LGU Guarantee Corporation (LGUGC) participation is valuable
Available Bank Financing to LGUs
NG-LGU Joint Energy Forum
• Private guarantee institution established in 1998 and owned by the BAP, DBP and ADB
• Provides credit ratings of provinces, cities, municipalities and local water districts
• Provides guarantee up to 85% of bank loans and 100% of bond issues of LGUs and WDs
• Also manages guarantee program for electric cooperatives
• As of July 2013, has guaranteed P5B out of total of P6.3 billion in loans and bonds ○ LGUs: P4.5 billion to 33 LGUs ○ Water districts: P1.8 billion to 14 WDs
LGU Guarantee Corporation (LGUGC)
NG-LGU Joint Energy Forum
BPI-LGUGC Working Relationship
NG-LGU Joint Energy Forum
BPI uses LGUGC’s credit rating system
Aaa ] Aa ] Creditworthy standing A ] Ba ] - - - - - - - - - - - - - - - - - - - - - - - - - - - -
B ] C ] Below creditworthy standing
• Credit ratings look at political risk, economic situation, overall governance, operating efficiency and financial performance
BPI-LGUGC Working Relationship (2007-Present)
NG-LGU Joint Energy Forum
BPI and LGUGC jointly evaluate credit worthiness of projects to be financed
BPI approves loans with 85% LGUGC guaranty
LGUGC leads Project Monitoring Board composed of representatives from LGUGC, LGU/WD and BPI
• Loan drawdowns calibrated with project progress • Periodic visits during term of loan
BPI Financing To LGUs and WDs
NG-LGU Joint Energy Forum
Financed 30 projects worth P2.8 billion
Approved loans of more than P2 billion to more than 20 LGUs and WDs
All loans with 85% LGUGC guaranty
BPI finances all types of energy projects
• Power generation and distribution • Energy efficiency
Project: Hotel
Project Construction of an energy efficient hotel with commercial arcade
Project Cost P70 Million
Loan Amount P50 Million
Borrower City
Payment Source Revenues from hotel operations and arcade; Internal Revenue Allotment (IRA)
NG-LGU Joint Energy Forum
Project: Reclamation and Tourism Development
Project Land development and construction of energy efficient resort facilities
Project Cost P210 Million
Loan Amount P150 Million
Borrower Province
Payment Source Lease rental from resorts; IRA and other provincial revenues
NG-LGU Joint Energy Forum
Project: Waste to Energy
NG-LGU Joint Energy Forum
Project Construction of plant to convert municipal waste to energy
Project Cost P300 Million
Loan Amount P150 Million
Proponent Municipality is a shareholder
Payment Source Sale of fuel
Project: Slaughterhouse
Project Construction of a semi-mechanized and energy efficient slaughterhouse with waste water treatment facility
Project Cost P25 Million
Loan Amount P20 Million
Borrower Municipality
Payment Source Service fees from meat wholesalers/vendors
NG-LGU Joint Energy Forum
Project: Bulk Water Supply System
NG-LGU Joint Energy Forum
Project Design, construction and operations & maintenance of a bulk water supply and filtration plant
Project Cost P230 Million
Loan Amount P140 Million
Borrower Technology Provider
Payment Source Water billings to the water district; LGUGC guaranty on payments of water district
Loan
• Loan Amount: P20-200 Million depending on type of project
• Equity contribution: 20-30% of total project cost
• Loan Term: Up to 10 years
• Acceptable collaterals: ○ Land ○ Building ○ Assignment of Contract Receivables ○ Assignment of Internal Revenue Allotment ○ Assignment of Water Billings ○ Guaranty of LGUGC
Financing Options
NG-LGU Joint Energy Forum
Lease
• Available only for purchase of equipment
• Equity Contribution/Guaranty Deposit: 10-20% of cost of equipment
• Lease Term: Up to 5 years
• Collateral ○ Equipment to be purchased ○ Guaranty of LGUGC
Financing Options
NG-LGU Joint Energy Forum
Making your Energy Projects Bankable
Ensure Project Viability
• Fulfills social and economic needs of the community
• Good revenue streams
• Good overall governance and management of project
NG-LGU Joint Energy Forum
Making your Energy Projects Bankable
Partner with Reliable Stakeholders
• Technology and equipment provider
• Fuel suppliers
• Power off-takers
Be open to Outsourcing and Management of Project
Ensure completeness of Regulatory Requirements, e.g.
Monetary Board opinion, DENR permits and licenses, DOE certifications, DOF clearance, etc.
NG-LGU Joint Energy Forum
Make BPI Your Bank! We make it easy.
NG-LGU Joint Energy Forum
Thank you!