📋 Tender Overview
Project Name
Geothermal Resource De-Risking Facility
Project Number
58245-001
Country / Economy
Philippines
Project Status
Proposed
Project Type / Modality of Assistance
Loan
Source of Funding / Amount
Loan: Geothermal Resource De-Risking Facility
Ordinary capital resources US$ 190.00 million
Operational Priorities
OP2: Accelerating progress in gender equality
OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
OP6: Strengthening governance and institutional capacity
Sector / Subsector
Energy / Renewable energy generation - geothermal
Gender
Some gender elements
Description
Geothermal Resource De-Risking Facility (GRDF). GRDF aims to reactivate greenfield investment in geothermal, which has been stranded since 2001, by mitigating investment risk at pre-development stage through sharing resource exploration cost and risk with the private developers. ADB extended technical assistance (TA) to assess investment constraints in entire geothermal development chain, and to prepare GRDF concept design in consultation with DOE and the National Geothermal Association of the Philippines (NGAP).
GRDF design principle. GRDF manages operation by mitigating technical and financial risks in geothermal resource exploration, while eliminating moral hazard and adverse selection, for financial and operational sustainability. GRDF adopts a stringent two stage selection process to select technically and financially capable GSC holders. Selected GSC holders will be required to submit the drilling plan for resource exploration for GRDF review and approval. GRDF provides sub-loan to cover 50% of the total cost of exploration drilling while the selected GSC holders are required to contribute to the remaining 50%. To avoid piling up the credit loss due to huge uncertainties in resource exploration, GRDF sets the benchmark to maintain resource confirmation success rate at 75% or above. Additional new sub-loan approval will be suspended in case the actual success rate falls below the benchmark, allowing GRDF to review the adequacy of the selection and internal appraisal process for enhanced risk control.
GRDF funding support. GRDF is established in the Power Sector Assets and Liabilities Management Corporation (PSALM) . It comprises two main components (i) the resource risk mitigation window which supplies a convertible loan to the selected GSC holder that covers 50% of total exploration drilling cost for geothermal resource confirmation, and (ii) the refinancing window which allows longer term repayment while enabling a fund revolving in the resource risk mitigation window to support wider geothermal investments to accelerate resource exploration. Upon successful resource confirmation, the selected GSC holder will have the following repayment options to choose from, (a) bullet payment, (b) refinancing, or (c) equity conversion with put option. If exploration is unsuccessful and no ge
