RCBC participates in PHL’s first ETF deal

ACEN Leadership Team headed by Chairman Fernando Zobel de Ayala, President & CEO Eric Francia, CFO Maria Corazon Dizon, SLTEC CEO Miguel de Jesus, and SLTEC President & COO Miguel Angelo Fernandez are joined by RCBC Capital Corp. President & CEO Jose Luis Gomez, BPI Capital Corp. President Rhoda Huang, RCBC President & CEO Eugene S. Acevedo, and BPI Executive Vice-President and Head of Corporate Banking John-C Syquia.

The Rizal Commercial Banking Corp. (RCBC) has participated in the first Energy Transition Financing (ETF) deal in the Philippines for an early decommissioning of a coal-fired power plant while re-investing funds in renewable energy.

This month, the RCBC Corporate Banking Group and RCBC Capital Corp. signed financing agreements relating to the ETF for South Luzon Thermal Energy Corp. (SLTEC) of AC Energy Corp. (ACEN), a subsidiary of the Ayala Corp.

“In 2020, RCBC ceased funding new coal power plants while redirecting resources towards renewable energy projects, and our participation in this ETF deal is part of that commitment,” RCBC President and Chief Executive Officer Eugene S. Acevedo said.

As part of the ETF deal, ACEN signed an amended and restated omnibus loan and security agreement for SLTEC’s 2×135-megawatt (MW) power plant in Calaca, Batangas with RCBC as one of the lenders.

In a regulatory filing, ACEN explained that the loan facility of up to P13.7 billion is intended to refinance SLTEC’s outstanding P9.8-billion loan facility, fund the partial redemption of capital in SLTEC held by ACEN, and finance other transaction-related expenses. In turn, ACEN will use the proceeds of the equity redemption to reinvest in renewable energy projects.

Through this mechanism, ACEN’s power plant would be decommissioned by 2040, or 15 years ahead of the plant’s technical life.

ACEN explained that the concept of this deal with RCBC and another bank adopts the principles of the Energy Transition Mechanism (ETM) being piloted by the Asian Development Bank (ADB) in South and Southeast Asia.

The ETM aims to use public, private, and philanthropic financing to provide low-cost capital to coal-fired power plants to accelerate their retirement and help jump-start reliable and affordable clean energy.

RCBC has been implementing its Environmental and Social Management System since 2011 under the guidance of the International Finance Corp. (IFC). This collaboration has continued for more than a decade now.

“With the IFC’s guidance, RCBC gained access to the Partnership for Carbon Accounting Financials (PCAF) and 2 Degree Investing Initiative (2DII) for the use of the Paris Agreement Capital Transition Assessment (PACTA) methodology. The PCAF and 2DII’s PACTA methodologies will enable RCBC to build a low-carbon and climate-resilient lending portfolio. The recent ETF with ACEN complements this objective,” Mr. Acevedo said.

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