Banks back Prime Infra hydro projects with P273.5-B financing

By Sheldeen Joy Talavera, Reporter

RAZON-LED Prime Infrastructure Capital, Inc. (Prime Infra) has secured financing support from local and international banks for the development of its 2,000-megawatt (MW) pumped storage hydropower projects in Laguna and Rizal through loans totaling P273.5 billion.

In a statement on Thursday, Prime Infra said it entered into a P214.87-billion project financing agreement with an eight-member bank syndicate.

The consortium includes Bank of the Philippine Islands, BDO Unibank, Inc., China Banking Corp., Land Bank of the Philippines, Metropolitan Bank & Trust Company, Philippine National Bank, Security Bank Corp., and Union Bank of the Philippines.

Prime Infra said the financing will be classified as a green loan with the assistance of MUFG Bank, Ltd.

The company also secured a P58.6-billion dual-currency equity standby letter of credit facility from foreign lenders MUFG Bank, Mizuho Bank, Ltd., and Sumitomo Mitsui Banking Corp.

“This historic financing reflects the confidence of local and international banks in Prime Infra’s capability to deliver large-scale, critical infrastructure,” Prime Infra President and Chief Executive Officer Guillaume Lucci said.

Mr. Lucci said the banks’ support would help finance the company’s pumped storage projects, which require significant capital.

“These agreements will accelerate critical infrastructure investments and strengthen energy security and reliability, which are the foundations of the Philippines’ sustained economic growth,” he added.

The funding will support the ongoing construction of the 1,400-MW Pakil Pumped Storage Hydropower Plant of Ahunan Power, Inc. in Laguna and the 600-MW Wawa Pumped Storage Hydropower Plant of Olympia Violago Water & Power, Inc. in Rizal.

Both projects, which have been certified as energy projects of national significance, are targeted to begin operations by 2030.

Pumped storage technology generates power during peak demand by storing energy by pumping water to an upper reservoir during off-peak hours.

Prime Infra is partnering with First Gen Corp. of the Lopez group to develop the projects. First Gen will invest P61.88 billion for a 33% equity interest in both projects.

COLOMBIA OIL DEAL
Separately, analysts said the planned acquisition by Prime Infra of Colombia’s largest independent oil and gas exploration and production firm could help reduce the Philippines’ dependence on oil imports as the Middle East war raises fuel supply concerns.

Global investment firm Carlyle has agreed to sell its entire stake in SierraCol Energy Ltd. to Prime Infra, complementing the latter’s power and energy infrastructure assets.

Carlyle and Prime Infra have entered into an agreement that is expected to close “within the following months,” SierraCol said in a statement on Wednesday.

The planned buyout has circulated since last year, with Carlyle seeking around $1.5 billion (P89.25 billion) for the Colombian firm, Reuters reported, citing industry sources.

The deal comes at a time when the Iran war has caused disruptions in a strategic waterway, raising oil supply concerns and pushing fuel prices higher.

“Prime Infra’s acquisition is timely and strategically attractive both commercially and geopolitically for Philippine energy security,” said Peter Louise D. Garnace, an equity research analyst at Unicapital Securities, Inc.

He said the major energy player’s acquisition of SierraCol could reduce the country’s dependence on oil-producing countries in the Middle East.

With SierraCol having a “structurally advantaged operation” given its proximity to processing, storage and transportation infrastructure, the Colombian firm is capable of producing high-quality and low-cost oil, he said.

SierraCol produces 77,000 barrels of oil equivalent per day, equivalent to 10% of Colombia’s total oil production. The company sources its oil from the country’s most prolific basins, including two giant fields — Caño Limón and La Cira Infantas.

“SierraCol could supply up to one-fifth of Philippine refinery demand, positioning it as the first Filipino-controlled international upstream oil producer and a huge strategic buffer in instances of oil crisis similar to the ongoing global supply shock amid US-Iran War,” Mr. Garnace said.

Marky Carunungan, an investment analyst at F. Yap Securities, said Prime Infra’s move to secure overseas production helps “diversify supply away from the Middle East and offers a natural hedge against oil price volatility, particularly amid current geopolitical tensions.”

Tony Hayward, executive chairman of SierraCol, said Prime Infra is expected to provide the company access to long-term capital.

“This acquisition strengthens our oil and gas expertise and complements our existing asset base in the Philippines,” Mr. Lucci said.

“Together, these capabilities position us to operate across the oil and gas value chain — from upstream to downstream, onshore and offshore — and to participate in the sector’s growth against the backdrop of a broader commodities supercycle,” he added.

Prime Infra is an infrastructure developer and operator focused on building and operating assets in energy, water, and waste management. Its energy portfolio includes gas-fired power plants, the Philippines’ only indigenous gas production facility, and large-scale pumped storage projects designed to support grid stability.