Citicore sets P70-B capital outlay

By MYRNA M. VELASCO

Citicore Renewable Energy Corporation (CREC) will be injecting capital outlay of P70 billion for the 1,500-megawatt renewable energy (RE) capacity buildup that it will be implementing over the next five years.

In a briefing with the media, CREC President and CEO Oliver Y. Tan noted that the five-year project pipeline will be bankrolled by various funding sources -- including proceeds from the initial public offering (IPO) of its subsidiary Citicore Energy REIT Corp (CREIT) which had its debut at the Philippine Stock Exchange (PSE) on Tuesday, Feb. 22.

“The 1,500MW would probably be around P70 billion rough estimate; it can be funded by the sponsor and various funding sources. As we spend, as we complete, we will be folding into CREIT, so there will be recycling of fund,” the CREC chief executive said.

For the construction of blueprinted RE facilities, he qualified that “fund could be from CREIT IPO proceeds, it can also lever, it can borrow from local banks to bankroll construction which later on will be folded into CREIT; and maybe a combination of preferred shares offering from the sponsor.”

On the typical requirements of banks on power supply agreements (PSAs) for electric generating facilities, Tan indicated that the Development Bank of the Philippines (DBP) “was the first to announce that they are open to fund solar plants even as a merchant plant; even without PSA; and I believe that rest of the banks will follow.”

For this year alone, Tan emphasized that capital expenditure (capex) allocated by CREC will be P3.0 billion -- primarily for the expansion its solar installations in Pampanga and its Silay plant in Negros Occidental.

The immediate capital spending for programmed projects, he stated, will partly meet the 630MW capacity installation that the company will be targeting starting this year that will rope in expansion of its Arayat-Mexico solar farm development in Pampanga and the run-of-river hydro venture of the company. These projects are on top of its solar rooftop installations that are catering to locators at the Authority of the Freeport Area of Bataan (AFAB).

“For the Arayat-Mexico phase 1, we are already doing the testing and commissioning – we should complete that by end of the month or early next month. Construction of phase 2 will immediately start thereafter, with target commissioning of phase 2 before the end of the year. And then the 3rd to 5th projects on the list – we were able to secure land rights and DOE (Department of Energy) service contracts, so we’ve started with preliminary engineering activities already,” Tan stressed.

He added that on the proposed run-of-river hydro development, “we already started construction with access roads and the target is to complete within three years; and then the rest is basically at land due diligence of our legal and technical teams.”

On Citicore group’s preference of undertaking real estate investment trust (REIT) listing at the local bourse, Tan explained the differentiating factor for renewable energy asset class compared to the other REITs would be that “CREIT enjoys full occupancy rate all year round, unlike the traditional office REITs which are inherently exposed to vacancy risks because tenants come and go.”

Relative to targeted revenue stream for their RE projects, he highlighted that one policy development igniting excitement on their part as a developer is the scheduled green energy auction program (GEAP) that the DOE will be administering this year.

The round one will have at least 2,000 megawatts of RE capacity; and half of that are earmarked for solar farm installations.

The company, according to Tan, is also studying the terms and conditions for the 850-megawatt RE capacity tendering that power utility giant Manila Electric Company (Meralco) had recently placed on the auction block – that is to match the unsolicited proposal lodged by the joint venture of Prime Infrastructure Capital Inc. of the Razon group and Solar Philippines Power Project Holdings Inc.