1. bpi_improving financing access of lgus
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BPI and Renewable Energy FinancingTRANSCRIPT
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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
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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
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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
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• 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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Make BPI Your Bank! We make it easy.
NG-LGU Joint Energy Forum
Thank you!