Lopez-led First Gen Corporation has signed P20 billion term loan agreement with major local banks - BDO Unibank, Inc. (BDO) and Bank of the Philippine Islands (BPI) – primarily to fund the acquisition of the 165-megawatt Casecnan hydroelectric power project (CHEPP) in Nueva Ecija.

As clearly laid down by First Gen Chief Financial Officer Emmanuel Singson, “the fresh financing will be used to fund the acquisition of CHEPP, which is vital to our transition towards a decarbonized and regenerative future.”

First Gen won the Casecnan hydropower facility for a price tender of $526 million, when state-run Power Sector Assets and Liabilities Management Corporation (PSALM) had privatized the asset in May this year.

Asset-seller PSALM previously indicated to media that it is expecting financial closing for the divested hydropower plant on or before the end of this year.

Charles M. Rodriguez, executive vice president and group head for Institutional Banking Group of BDO, noted that their bank is “committed to a sustainable future as we provide access to capital to renewable energy projects which BDO considers as a priority sector in financing.”

He qualified that First Gen’s purchase of the Casecnan plant, “will help in power generation in the community as it uplifts the lives of Filipinos while protecting the environment,” adding that the new loan facility will spur the bank’s “robust and longer-term business relationship with First Gen.”

The Lopez firm has been lining up business synergy of the Casecnan hydro plant acquisition with its existing Pantabangan-Masiway hydropower facility which are sited proximate to each other; as well as their ongoing 120-megawatt Aya pumped storage hydropower development, which is also in Pantabangan, Nueva Ecija.

According to Juan Carlos Syquia, executive vice president and head of Institutional Banking at BPI, the Ayala-led bank is “always eager to support our clients’ sustainability initiatives.”

He stressed that for the Casecnan plant, “we are glad to have done so by providing First Gen with more innovative financial solutions and improve the quality of life in the communities First Gen operates in and in the communities it serves. This forms part of our vision to build a better Philippines – one family, one community at a time.”

The Casecnan plant was previously under the management and operation of US firm CalEnergy International, then after the lapse of its build-operate-transfer (BOT) contract with the government, it already turned over the plant to PSALM in 2020.

It was from that time on that PSALM, and its co-owner agency National Irrigation Administration (NIA), had decided on the privatization of the hydropower plant asset, which led to the auction process in May this year.