18 Oct 2006
The International Bank for Reconstruction and Development or World Bank (IBRD) and the Asian Development Bank (ADB) are willing to extend guarantees to the winning bidder of the National Transmission Corporation (TransCo) 25-year concession.
In a joint notice addressed to all interested bidders, the two international major creditors disclosed that they are "prepared, in principle, to consider provision of an IBRD partial risk guarantee and ADB guarantee, if such guarantees are requested by a potential bidder."
"The World Bank and the Asian Development Bank have been actively supporting the power sector reform agenda of the Government of the Philippines," the two lending institutions said in their joint notice.
Both the IBRD and ADB are currently considering respective guarantee support of up to $250 million each.
"As part of the sector reform, the IBRD and ADB support the proposed Transco concession to finance, operate, maintain, rehabilitate and expand the nationwide transmission network," WB and ADB said.
The guarantees are "intended to protect the concession against certain payment defaults resulting from the failure of the government to meet its contractual obligations under the concession documents."
IBRD and ADB will each require the Republic the Philippines to provide a counter-indemnity for the guarantees for the concession.
In an earlier letter sent to the Power Sector Assets and Liabilities Management Corporation (PSALM), the agency tasked to privatize TransCo, the International Finance Corporation (IFC), the private sector arm of the World Bank, has also offered to provide financing support to the TransCo future concessionaire.
"We would like to thank the World Bank and ADB for their unwavering faith on PSALM as the government institution mandated to privatize its power plants and transmission assets," PSALM President Nieves L. Osorio said.
“WB and ADB’s continuing support is vital in our pursuit of the government’s power reform agenda. We would like to assure our lenders that we will continue to be guided by the principles of transparency and integrity,” she added.
She also pointed out that the guarantees being offered by WB and ADB will certainly boost the potential bidders’ resolve to participate in the final bidding process of the TransCo concession set in November.
Strategic Communications and Partnership Division |