BANK of the Philippine Islands (BPI) has committed to create financial programs that will finance sustainable energy projects in Mindanao.
During the Mindanao Energy Investment Forum (MEIF) Wednesday, April 3, BPI vice president and certified financial analyst Arnold Oliva said partnering with the government on financing energy projects need to go through credit-rating before approval.
"BPI is a proud development partner of the government and the private sector in bringing about a stable, reliable and affordable power structure in Mindanao," Oliva said.
Oliva said BPI has funded and have continued to fund new power plants in Mindanao.
He explained that credit-rating of power generation projects should be assessed on its predictability and sufficiency of cash flows; competitiveness and regulatory support; technical and operating profile; and leverage and coverage.
"[This is] our perspective on how we evaluate generation projects, if it is a 'go' or a 'no go'," he said.
Predictability and sufficiency of cash flows is 30 percent of the credit-rating which checks the degree of contractual support underpinning project revenues, diversity of revenue sources and the ability to find replacement contract on substantially similar terms. While competitiveness and regulatory support takes 15 percent of the credit-rating and checks the structure cost, contracted pricing terms and environmental risks and changes in regulatory landscapes.
The technical and operating profile takes 20 percent while the leverage and coverage is 35 percent and is about the debt service coverage ratio and its operating parameters.