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German bank may lend $2.2 B for FGen LNG projects


By Myrna M. Velasco

Germany’s KfW IPEX-Bank is eyeing to extend financing to the $2.2 billion worth of integrated liquefied natural gas (LNG) import terminal and gas-fired power projects of First Gen Corporation that are now gaining traction into implementation phases.

First Gen logo

The Lopez company will have groundbreaking for its $1.0 billion LNG import facility this week along with partner Tokyo Gas Co. Ltd. It is also planning to accelerate its two new gas plants for aggregate capacity of 1,200MW which will command separate investment of roughly $1.2 billion.

“For them (KfW bank executives), they would love to support our expansion…they’re keen on looking at LNG, they’re also looking at building Santa Maria and Saint Joseph plants,” First Gen President and Chief Operating Officer Francis Giles B. Puno disclosed.

The executives of the German development bank were in the country last week trying to get a sense of how gas-underpinned project developments in the country have been moving headway.

Puno qualified that KfW has been the Lopez firm’s long-term lender – its project financing involvements had been as far as their 1,000-megawatt Santa Rita and 500MW San Lorenzo power projects which were brought to commercial stream back in the 1990s; and the German bank was also in the firm’s latest San Gabriel gas plant.

“They’ve been very supportive on funding Santa Rita, San Lorenzo and San Gabriel.

So they’re helping us and giving us advice on how we can make projects that we develop become bankable. It’s nice because they’re taking on more risks than they were in the past, but at the same time, there is also a minimum requirement to make it bankable for them,” he expounded.

The First Gen executive noted KfW is among those foreign banks already given mandate by their principals to stop lending to coal-fired projects, hence, it is now generally focusing on project financing of clean energy sources – and for that KfW has been gaining a lot of experience on LNG projects in Brazil.

“In their case, they also went through not being allowed anymore to lend to coal – so that decision was essentially a policy decision. Having said that, they have a number of projects in Brazil and other countries that focused on LNG to power,” Puno said.

In the Philippines’ fresh quest for capacity build-up to address supply-demand equilibrium by year 2022-2023, First Gen is the company that is kickstarting investment bets anew on major-scale capacities.

On First Gen’s LNG import terminal, it will likely reach final investment decision (FID) by end this year or first quarter of 2019, after concretizing the engagement of other partners in the project.

The development of the Santa Maria and Saint Joseph gas-fired power facilities will run parallel to the LNG terminal installation – with commercial operations targeted in 2023.

Of the two LNG import terminal projects greenlighted by the Department of Energy (DOE), it is the First Gen-Tokyo Gas venture that is currently advancing.

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