CITICORE Renewable Energy Corp. (CREC) has formed a joint venture with SMC Global Light and Power Corp. (SGLP), the power arm of San Miguel Corp. (SMC), to build a 153.5-megawatt (MW) solar power plant in Mariveles, Bataan, the Saavedra-led solar power company said on Monday.
CREC and SGLP recently signed an investment and shareholders agreement to jointly develop, construct, and operate a solar power plant, the company said in a regulatory filing.
“The joint venture will add approximately 76.75MW to the company’s attributable solar energy capacity,” CREC said.
“The parties shall collaborate and cooperate in the financing, construction, ownership, operation, and maintenance of the plant through the subscription to a special purpose entity,” it added.
SGLP, a wholly owned subsidiary of San Miguel Global Power Holdings Corp., the power arm of San Miguel Corp., intends to participate in a special purpose entity (SPE) for the project, subject to several conditions.
These conditions include: incorporation of the SPE; completion of CREC’s due diligence on the SPE within 10 days after its incorporation; transfer of the solar energy operating contract from SGLP to the SPE with consent from the Energy department; CREC’s subscription to the SPE; and execution of energy supply contracts, sublease agreements, and engineering, procurement, and construction contracts with the SPE.
Upon satisfaction of these conditions, both parties will subscribe to the SPE, with CREC initially owning 49% and SGLP owning 51% of the total issued and subscribed capital stock.
During the construction phase, CREC will subscribe to additional shares, resulting in an equal 50:50 ownership between the two companies.
Last month, CREC listed its P5.3-billion initial public offering consisting of 1.79 billion common shares, with a 10% overallotment option of up to 178.57-million secondary common shares at P2.70 apiece.
CREC aims to add one gigawatt (GW) of solar energy capacity annually to the Philippines energy mix, focusing on ready-to-build or under construction projects over the next five years, aiming for a total of around 5 GW by 2028.
First Metro Investment Corp. Head of Research Cristina S. Ulang said that the joint venture aligns closely with SMC’s strategy to pursue additional joint ventures.
“Risk sharing is becoming more a feature of SMC’s renewable energy expansion strategy,” she said via Viber.
Regarding CREC, Ms. Ulang said that the joint venture “lightens up the capitalization and risk burden for them too.”
“They both have the technology and benefit from tech know-how sharing and capabilities,” she added.
At the local bourse on Monday, CREC shares in the company closed at P2.69 each. — Sheldeen Joy Talavera