IN what appears more like another case of bureaucratic red tape that has driven away investors in the past, the much anticipated Laguna Lake solar farm project has yet to secure its environmental compliance certificate (ECC) from the Department of Environment and Natural Resources (DENR), says the project developer.
Philippine Solar and Storage Energy Alliance Chairperson Tetchi Cruz-Capellan expressed concerns over the project finance-raising activities because of the programmatic ECC that may turn out not acceptable as a requirement to lenders, especially to foreign banks.
According to Capellan, the DENR hinted only at issuing permits, from which the Laguna Lake Development Authority (LLDA) will be securing the programmatic ECC on behalf of the developers of the floating solar projects that are already in the implementation phases.
Local Bank Constraints
While waiting for the DENR to issue the ECC, the LLDA will just have to issue a certificate of conformity to the project sponsors, which to Capellan may not sit well with the project sponsors, especially in raising much-needed funding to bankroll their projects.
“Our dilemma is: the banks might not accept that – because a ‘certificate of conformity’ by its very nature is not an ECC, so that’s our hurdle with a programmatic ECC,” she lamented.
For local banks, she conveyed that the solar project sponsors already had discussions with the Board of Investments (BOI) that the remedy is to ask the Bangko Sentral ng Pilipinas (BSP) to issue a Circular that shall “confirm that the certificate of conformity issued by LLDA to the developers, is valid.”
Foreign Funds Dilemma
Capellan, however, emphasized that the predicament will not stop there – because the non-ECC version of a permit may not satisfy the requirements of foreign lenders, “so that has to be addressed also.”
She qualified “Financing from foreign banks will be crucial because the local banks cannot fully finance floating solar projects that are as big as 2,000 megawatts.”
On the initial discussion that PSSEA had with Environment Secretary Maria Antonia Loyzaga, Capellan shared that what is being considered as a remedy is to elevate the matter to the Department of Finance (DOF) so the agency can help resolve this concern with the foreign lenders.
“We can do that as a next step, but for now, we have to deal with our dilemma with the local banks first. The BOI already told us that it will make representation to the BSP; but our organization (PSSEA) will also lodge a separate letter with the BSP to resolve that particular concern,” Capellan further noted.
Just One ECC For All
Apart from financing, Capellan stated that a ‘programmatic ECC’ will also bring more problems to the developers, “because if one of the proponents will under-perform, the overall project risk for everybody will become higher – so it becomes a case that: the sin of one is the sin of all.”
And on the sphere of the actual application for ECC, if one of the developers is delayed in meeting all the requirements for the filing, then all the projects will be delayed because we will just be relying on a single ECC to be secured by LLDA.
“We will just have one application for ECC – so if one project developer is delayed, then all of us will be delayed because we tend to wait for each other on when our peers could complete their requirements, so it becomes a common risk for everybody,” Capellan expounded.
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