THE ASIAN Development Bank (ADB) has approved a technical assistance loan for the Philippine National Oil Co.’s (PNOC) Batangas Liquefied Natural Gas (LNG) project.
According to project documents available on its website, the ADB said that it approved on May 11 the $2-million loan for the natural gas project in San Pascual, Batangas.
The ADB said that the project will act as a hub for imported LNG, breaking it down into smaller shipments for neighboring islands. It will also re-gasify the LNG and supply gas-fired power plants nearby which are currently dependent on gas from the dwindling supply provided by the Malampaya offshore field in northern Palawan.
The LNG project “is envisaged to consist of a 5-million ton per annum LNG terminal, including storage units, re-gasification facilities, a power plant, loading/unloading area for LNG carriers, and supporting infrastructure,” the ADB said.
The ADB will provide transaction advisory services (TAS) for the project, which it hopes will “strengthen outcomes” via improved sector engagement, technical design, and implementation.
“TAS will promote the sustainability of infrastructure by emphasizing operations and maintenance, and ultimately leveraging private sector investments more effectively,” the ADB said.
However, the scope of assistance will depend on the project’s procurement mode. For unsolicited proposals, the ADB will screen and assess the viability of unsolicited proposals; assist the PNOC in negotiations with the unsolicited bidder until the granting of original proponent status; assist with the drafting of tender documents and the conduct of tender to competitively challenge the proposal of the original proponent; and the drafting of final legal agreements and negotiations of the legal documents until the concession agreement is signed.
For solicited tenders, the ADB will assist in the structuring of the project, preparing the pre-feasibility or feasibility study, drafting the tender documents, drafting the legal documents, market sounding, tendering the project and assist in the negotiation of the project with the winning bidder until the concession agreement is signed.
It may also provide advice on the monetization of the project.
Aside from securing energy sustainability, the project is also expected to “reduce the need for other fuel imports like coal or liquid fuel, which are considered more harmful to the environment.”
“Additionally, savings in foreign exchange from less expensive fuel, jobs creation, and stimulation of local economy are also anticipated,” the ADB added.
Separately, the Department of Finance said it expects to start using program loans from the ADB for infrastructure development and financial inclusion projects by the fourth quarter.
Documents distributed to reporters by the DoF’s International Finance Group indicate that two of four loans that are in the ADB’s 2018 country lending pipeline are to be used later this year.
These include the $300-million Expanding Private Participation in Infrastructure Program, Subprogram 2, which seeks to strengthen the financial support, implementation, and regulatory frameworks to Public-Private Partnerships; as well as the $300-million Inclusive Finance Development Program, Subprogram 1 worth $300 million that aims to strengthen the institutional environment and infrastructure to support financial inclusion, as well as to increase the capacity and reach of service providers of nonbank institutions to rural areas.
The DoF said that the first loan program is currently “awaiting the Office of the President’s issuance of Special Presidential Authority,” as it is targeted for the ADB Board of Governors’ approval by the fourth week of June, following which the target for first disbursement of $100 million has been set for Oct. 10.
The financial inclusion loan is awaiting the National Economic and Development Authority’s signature and the Development Budget Coordination Committee’s approval. The target for ADB approval is the third week of August with the disbursement of an initial $150 million targeted for Nov. 8. — Elijah Joseph C. Tubayan