Extended Annual Review Report

Project Number: 48325-001

Loan Number: 3246
October 2019

EDC Burgos Wind Power Corporation

150-Megawatt Burgos Wind Farm Project
(Philippines)

This is an abbreviated version of the document, which excludes information that is subject to
exceptions to disclosure set forth in ADB's Access to Information Policy .
 CURRENCY EQUIVALENTS
Currency Units – peso (₱)

At Appraisal At Project Review

(8 September 2014) (31 May 2019)
P1.00 – $0.0229 $0.0192
$1.00 – ₱43.58 ₱52.07

ABBREVIATIONS

ADB – Asian Development Bank

COE – Certificate of Eligibility
DOE – Department of Energy
EBWPC – EDC Burgos Wind Power Corporation
EDC – Energy Development Corporation
EIRR – economic internal rate of return
ERC – Energy Regulatory Commission
FIRR – financial internal rate of return
FIT – feed-in-tariff
FIT-All – FIT Allowance
GHG – greenhouse gas
GWh – gigawatt-hour
IEE – initial environmental examination
kWh – kilowatt-hour
kV – kilovolt
MW – megawatt
O&M – operation and maintenance
OHSAS – occupational health and safety advisory services
RRP – report and recommendation of the President
Transco – National Transmission Corporation

NOTES
(i) The fiscal year (FY) of EDC Burgos Wind Power Corporation ends on 31 December.
FY before a calendar year denotes the year in which the fiscal year ends, e.g.,
FY2019 ends on 31 December 2019.
(ii) In this report, "$" refers to US dollars.
Vice-President Diwakar Gupta, Private Sector Operations and Public–Private
Partnerships
Director General Michael Barrow, Private Sector Operations Department (PSOD)
Senior Advisor/ Craig Roberts, Private Sector Operations Department/ Portfolio
Officer-in-charge Management Division

Team leader Sergey Mokroussov, Investment Specialist, PSOD

Team members Kristy Harrison, Senior Safeguards Specialist, PSOD
Manfred Kiefer, Senior Economist, PSOD
Jose Limjap (Consultant), PSOD
Jocelyn Munsayac, Principal Safeguards Specialist, PSOD
Siela Teng-Almocera, Social Development Officer (Safeguards), PSOD
Russ Toribio, Associate Investment Officer, PSOD

In preparing any country program or strategy, financing any project, or by making any
designation of or reference to a particular territory or geographic area in this document, the
Asian Development Bank does not intend to make any judgments as to the legal or other status
of any territory or area.
 CONTENTS

Page

BASIC DATA i
EXECUTIVE SUMMARY ii
I. THE PROJECT 1
A. Project Background 1
B. Key Project Features 2
C. Progress Highlights 3
II. EVALUATION 5
A. Project Rationale and Objectives 5
B. Development Impact 5
C. ADB Additionality 7
D. ADB Investment Profitability 7
E. ADB Work Quality 7
III. ISSUES, LESSONS, AND RECOMMENDED FOLLOW-UP ACTIONS 8
A. Issues and Lessons 8
B. Recommendations and Follow-Up Actions 9

APPENDIXES
1. Project-Related Data 10
2. Results and Ratings for Project Contributions to Private Sector Development and ADB
Strategic Development Objectives—Infrastructure 11
3. Sector Review 15
4. Environmental Impact 17
5. Social Impact 22
 i

BASIC DATA
EDC Burgos Wind Power Corporation
150-Megawatt Burgos Wind Farm Project
(LN3246-Philippines)
As per ADB Loan
Documents Actual
Key Project Data ($ million) ($ million)
Total Project Cost 461.1 450.0
ADB Investment:
Loan:
Committed 20.0 19.6
Disbursed 19.6
Outstanding 16.9

ADB = Asian Development Bank.

Key Dates Expected Actual

Concept Clearance Approval 28 Jul 2014 28 Jul 2014
Fact-Finding Missions 4 Aug 2014 4 Aug 2014
7-9 Aug 2014 7-9 Aug 2014
Board Approval 26 Jan 2015 26 Jan 2015
Execution of Term Loan Agreement 10 Nov 2015 10 Nov 2015
Loan Effectiveness 10 Nov 2015 10 Nov 2015
First Disbursement 15 Dec 2015 15 Dec 2015

Project Administration and Monitoring Number of Missions Number of Person-

Days
Due Diligence and Appraisal 2 10
XARR Mission 1 15
 EXECUTIVE SUMMARY

On 26 January 2015, the Asian Development Bank (ADB) approved a $20 million senior
secured term loan to EDC Burgos Wind Power Corporation (EBWPC) for the 150-Megawatt
(MW) Burgos Wind Farm Project. EBWPC is a wholly owned subsidiary of Energy Development
Corporation (EDC). The ADB financing is part of a $315.0 million syndicated debt facility
arranged to refinance the development and construction cost of the project. ADB committed
$19.6 million to the project financing. The project consisted of (i) the installation of 50 3.0 MW
wind turbine generators and ancillary plant equipment, (ii) the construction of a 43 kilometer 115
kV transmission line, and (iii) the construction of a substation in Burgos and expansion of an
existing substation in Laoag, Ilocos Norte. The total project cost was $450.0 million.

When the Renewable Energy Act was passed in 2008, one of the incentives was the provision
of a fixed tariff under a feed-in-tariff (FIT) system for renewable energy projects. However, the
Energy Regulatory Commission (ERC) only announced the FIT rates and installation targets for
each type of renewable energy source on 27 July 2012. A tariff of P8.53/kilowatt-hour (kWh)
was set for wind power, with an initial installation target of 200 MW. The ERC subsequently
released the FIT eligibility guidelines on 28 May 2013, which prescribed a “first come first
served” basis for the allocation of FIT eligibility, subject to 80% completion and successful
commissioning. The resulting uncertainty concerning FIT eligibility deterred financial institutions
from financing renewable energy projects. As a result, renewable energy developers, including
EBWPC, had to finance construction of the projects using their balance sheet, with the intention
of refinancing their projects on a project finance basis once the FIT eligibility allocation had been
granted. The project started commercial operations on 11 November 2014, the same day its
Certificate of Endorsement (COE) for the FIT was issued. The project locked in a FIT rate of
₱8.53/kWh for 20 years until 10 November 2034.

The project’s operating and financial performance through 2018 has exceeded the projections
given in the report and recommendation of the President. Actual net power generation was
320.3 gigawatt-hours (GWh) in 2016, 372.5 GWh in 2017, and 376.0 GWh in 2018, exceeding
the RRP projection of 289.2 GWh, based on a conservative P90 wind resource forecast.1 Profit
margins are stable and operating cash flows are sufficient to cover debt service payments.

FIT implementation issues, however, caused EBWPC’s receivables from Transco to increase to
a high of $34.5 million (200 days receivable) in 2017. The FIT Allowance (FIT-All) fund,
managed by Transco, did not have enough funds to cover all FIT rate payments. The FIT-All
rate charged to all electricity consumers was initially pegged at ₱0.04/kWh for 18 months. The
rate was too low, given that eligible total renewable energy capacity installed had almost
doubled from the installation target of 750 MW to 1,400 MW, and that the differential between
the FIT rate and spot rate had widened because of a lower than anticipated spot rate. The FIT-
All rate was eventually adjusted to ₱0.1240/kWh effective April 2016 and now stands at
₱0.2226/kWh for 2019. With the higher FIT-All rate, Transco has managed to pay all overdue
FIT allowances. Transco estimates that at ₱0.2226/kWh, the fund will still be able to service all
payables. The fund currently has a surplus of ₱1.0 billion. As of March 2019, the EBWPC
collects its revenues on time and is now aligned with the two-month billing and collection cycle.
EBWPC’s receivables from Transco dropped to around $10.0 million (60 days receivable) in the
first quarter of 2019.

1 P90 means there is a 90% probability of the wind resource forecast being exceeded each year.
 iii

The ERC has yet to approve a FIT rate increase indexed to foreign exchange and inflation rate
increases as provided for under the FIT rules. The delay was due to a change of commissioners
in 2017 and a review of the methodology approved under the FIT Rules. The estimated rate
recommended by Transco for 2019 is ₱9.9808/kWh and ₱10.1887/kWh for 2020. ERC has
started the process of discussing the FIT rate escalation methodology with stakeholders prior to
presentation to the commissioners. The incremental rate is expected to be confirmed in 2020.

The project supported government efforts to increase the country’s portfolio of renewable
energy generating capacity; total wind power installed capacity has reached 427 MW.

EBWPC is proactively managing the environmental and social risks of the project. The
institutional systems, capacity, and commitment of EBWPC to manage the environmental and
social impacts are deemed adequate. The project’s operation from 2015 to 2018 has delivered
1,321.5 GWh of electricity to the grid and this translates to around 894,000 tons of carbon
dioxide (CO2) equivalent emissions avoided.

Given favorable weather conditions, the project has demonstrated strong overall operating and
financial performance through 2018, despite the absence of any FIT rate increase. EBWPC’s
operations through 2018 have demonstrated strong margins, cash flow generation, and liquidity
despite the rise in FIT receivables from Transco.

ADB has provided guidance to EDC and EBWPC on the environment and social safeguards
even when the project was still in the development stage. ADB’s participation also helped bridge
the project’s financing gap. The deal team also worked with EDC and other potential lenders in
crafting the financing terms. The deal team closely monitors EBWPC’s operating and financial
performance through regular communication and follow-up on the timely submission of reports
and financial statements and has also met with both the ERC and Transco to convey ADB’s
concerns and get an update on the FIT implementation issues.
 I. THE PROJECT

A. Project Background

1. On 26 January 2015, the Asian Development Bank (ADB) approved a $20 million senior
secured term loan to EDC Burgos Wind Power Corporation (EBWPC) for the 150-Megawatt
Burgos Wind Farm Project. EBWPC is a special-purpose vehicle incorporated in the Republic of
the Philippines on 13 April 2010 specifically to develop, construct, operate, and maintain a 150
MW grid-connected wind power plant in Burgos, Ilocos Norte, Philippines. It is a wholly owned
subsidiary of Energy Development Corporation (EDC).1 The ADB financing is part of a $315
million syndicated debt facility arranged to refinance the development and construction cost of
the project.

2. In December 2008, the Renewable Energy Act was signed into law to promote the
development of emerging renewable energy, namely from wind, solar, biomass, and ocean
sources. Its goal was to promote energy self-reliance and reduce the country’s dependence on
imported fossil fuels for power generation. Based on the Department of Energy (DOE)
estimates, the Philippines has untapped renewable energy potential of about 250,000 MW, and
the DOE targets to achieve about 2,870 MW of additional installed capacity from these
emerging sources by 2030. 2 Under the Renewable Energy Act, emerging renewable energy
projects will benefit from (i) fiscal incentives like a 7-year income tax holiday and duty free
importation of capital equipment, (ii) priority connection to the transmission and distribution
systems, (iii) priority purchase and transmission of, and payment for, electricity sold through the
grid, and (iv) a fixed tariff under a feed-in tariff (FIT) system.

3. Notwithstanding the passage of the Renewable Energy Act in 2008, no significant

investments in renewable energy plants ensued because of the delay in the implementation of
the FIT scheme. The Energy Regulatory Commission (ERC) only announced the FIT rates and
installation targets for each type of renewable energy source on 27 July 2012. A tariff of
₱8.53/kWh was set for wind power, with an initial installation target of 200 MW. The ERC
subsequently released the FIT eligibility guidelines on 28 May 2013, which prescribed a “first
come first served” basis for the allocation of FIT eligibility.3 The FIT eligibility policy is meant to
weed out speculators from serious power developers. However, the uncertainty of FIT eligibility
also deterred financial institutions from committing to finance renewable energy projects. As a
result, renewable energy developers, including EBWPC, financed construction of the projects
using their balance sheet, with the intention of refinancing their projects on a project finance
basis once the FIT eligibility allocation had been granted.

1 EDC is the largest geothermal energy producer in the country and the second largest integrated steam and
geothermal energy producer in the world. The company operates 11 company- and subsidiary-owned geothermal
power plants with an aggregate installed capacity of 1,129.4 MW. EDC holds 2 wind service contracts in the
Philippines for the development of wind farm projects in Burgos and Pagudpud, Ilocos Norte. EDC is indirectly
owned by First Philippine Holdings, a diversified local conglomerate with interests in power generation, power
distribution, broadcasting, telecommunications, and manufacturing.
2 ADB. 2015. Report and Recommendation of the President to the Board of Directors: Proposed Loan to EDC
Burgos Wind Power Corporation for the 150 MW Burgos Wind Farm Project (Philippines). Manila.
3 The guidelines indicate that a renewable energy developer can only initiate the process for FIT eligibility once its
project has achieved electromechanical completion (project is at least 80% complete). The DOE, however, will only
issue a Certificate of Endorsement (COE) for FIT eligibility to ERC after it validates that the project has reached
successful commissioning. The DOE will continue to issue the COE until the maximum installation target for each
renewable energy technology is fully subscribed. The COE will indicate the installed capacity that will be eligible for
the FIT rate and the actual date of commercial operation.
2

4. EDC first approached ADB after the passage of the Renewable Energy Act. The deal
team discussed ADB’s requirements, especially with respect to the environment and social
safeguards. ADB chose to support EBWPC’s refinancing initiative for the following reasons: (i)
the project was developed by a strong sponsor with a successful track record of developing,
financing, constructing, owning, and operating power generation projects in the Philippines; (ii)
based on the wind mapping done by the United States National Renewable Energy Laboratory,
the sites with the greatest potential for wind energy generation in the Philippines included the
Ilocos region where the project was located; (iii) the project would contribute to the
diversification of the fuel mix of the Luzon grid, which relied heavily on imported fossil fuels; and
(iv) the project would avoid an increase in greenhouse gas emissions as it would reduce the
supply of power generated from coal-fired power plants.

B. Key Project Features

5. The project consisted of the (i) installation of 50 3.0 MW wind turbine generators
supplied by Vestas Wind Systems A/S (Vestas)4 and ancillary plant equipment, (ii) construction
of a 43-kilometer, 115-kilovolt (kV) transmission line, and (iii) construction of a substation in
Burgos and the expansion of an existing substation in Laoag, Ilocos Norte. Total project cost
was $450.0 million (Appendix 1, Table A1.3). Commercial operations started on 11 November
2014 after completion of the transmission line on 15 October 2014. EBWPC signed a 10-year
operation and maintenance (O&M) contract with Vestas with a guaranteed availability factor;
while the contract is until 2024, it is renewable. The transmission line is maintained by First
Balfour, another subsidiary of EDC, under a 5-year contract until 2020 but also renewable. The
COE for the project was issued on 11 November 2014. The ERC granted the FIT Certificate of
Compliance on 13 April 2015; this specifies that the project is entitled to the FIT rate of ₱8.53,
subject to escalations as approved by the ERC, from 11 November 2014 to 10 November 2034.
The project was the first wind farm project to receive FIT eligibility and locked in a FIT rate of
₱8.53/kWh for 20 years until 2034. EBWPC elected to sell its generated electrical output
through the Wholesale Electricity Spot Market, subject to the must-dispatch provisions of the
Renewable Energy Act, with the National Transmission Corporation (Transco) as off-taker.

6. On 17 October 2014, EBWPC executed the following facilities to refinance the project: (i)
an Export Credit Agency (ECA) Debt Facility up to $150.0 million with an 80% comprehensive
guaranty, provided by the Danish ECA, Eksport Kredit Fonden; (ii) a $37.5 million USD
Commercial Debt Facility; and (iii) a $127.5 million equivalent Peso Commercial Debt Facility
but not to exceed ₱6.0 billion. The final maturity date of the facilities is 15 December 2029. EDC
provides a comprehensive debt service guarantee that is expected to fall away in 2022 when
the conditions for release, including completion of the land registration process, are expected to
be satisfied. The facilities were fully drawn down on 15 June 2015. EBWPC executed seven
interest rate swaps with an aggregate notional amount of $181.25 million to partially hedge the
interest rate risks on the USD-denominated facilities.

7. ADB intended to participate in the financing at the same time as all the commercial
lenders and Eksport Kredit Fonden. This would have allowed ADB to earn both the front-end fee
and commitment fee as contemplated in the term sheet. However, ADB could not obtain final

4 Vestas Wind Systems A/S, incorporated in Denmark in 1945, is the global leader in the design, manufacture,
installation and service of wind turbines. With 105 GW of installed wind turbines in 80 countries, Vestas leads with
more than 17% share of worldwide installed wind capacity of approximately 591 GW.
 3

investment committee and Board approval until EDC had approved the disclosure of the
safeguard documents on the ADB website. EDC was hesitant to disclose the safeguard
documents until they had been awarded the FIT eligibility certification by the government. The
safeguard documents contained important information about the project, which EDC was not
comfortable disclosing until they had received the certification as FIT eligibility was limited and
competition to secure FIT eligibility certification was very tight. FIT eligibility was eventually
awarded to the project in November 2014 and ADB subsequently posted the required
documents. The deal team secured the concurrence of the banks participating in both the ECA
and USD Commercial Debt Facilities to sell down their commitments on a pro rata basis to ADB.
Although Board approval for ADB’s participation in the financing was obtained on 26 January
2015, ADB only executed the Accession Agreements with the other lenders on 10 November
2015 and disbursed $19.6 million on 15 December 2015. ADB’s participation consisted of
$17.94 million under the ECA Debt Facility and $1.66 million under the USD Commercial Debt
Facility. ADB’s participation was further delayed because certain lenders entered into cross-
currency swaps to hedge their exposure and they had to wait for the swaps to terminate since
the unwinding cost was prohibitive.

C. Progress Highlights

8. The project’s operating performance from 2015 to 2018 approximates the results of the
P50 base case financial model submitted by EBWPC to the banks.5 Actual net power generation
of 320.3 gigawatt hours (GWh) in 2016, 372.5 GWh in 2017, and 376.0 GWh in 2018 compare
favorably with the projected P50 average annual net generation of 360.7 GWh throughout the
forecast period. Only in 2015 did the plant’s power output of 252.7 GWh fail to reach the desired
level. This was because the project operated on a de-rated capacity from November 2014 until
the end of September 2015 because of transmission line congestion in the Luzon grid. The
congestion was resolved in September 2015 when the National Grid Corporation of the
Philippines energized the 230 kV San Esteban-Laoag transmission line; no curtailment in output
has been experienced by the project since then. On average, however, the wind resource
available for generation in 2015 was recorded at 303 GWh. The availability factor from 2016–
2018 exceeded the availability guaranteed by Vestas under the O&M agreement.

9. EBWPC’s financial performance from 2016 to 2018 is also favorable compared to the
conservative RRP projections (Table 1). Actual profit margins and operating cash flows exceed
RRP projections, notwithstanding the latter assuming that FIT rate escalation would start in
2016. A major concern, potentially affecting EBWPC’s liquidity, has been ERC’s failure to
confirm the annual FIT rate escalation to be paid to eligible renewable energy operators since
2016, as provided for under the FIT Rules (2010), and ERC’s slow process in approving annual
increases in the FIT-Allowance (FIT-All), a universal charge levied on all power consumers by
distribution utilities and remitted the 15th of every month to Transco, which manages the FIT-All
fund. Transco sources the FIT rate payments due on the 5th of every month to all FIT eligible
renewable energy operators from the FIT-All fund. The FIT-All fund is composed of proceeds
from the collection of the FIT-All from end-users to cover the FIT shortfall between the
guaranteed FIT and the spot market.

5 P50 means there is only a 50% probability of the wind resource forecast being exceeded each year.
4

Table 1. Projected vs Actual Financial Performance6

2015 2016 2017 2018
(in USD 000) Actual RRP Actual RRP Actual RRP Actual RRP
Revenues 51,745 51,723 56,661 58,735 63,000 59,299 61,197 59,873
EBITDA 39,647 39,524 42,881 44,428 48,623 44,973 48,034 45,543
EBITDA Margin 76.6% 76.4% 75.7% 75.6% 77.2% 75.8% 78.5% 76.1%
Net Profit (868) (4,090) 12,146 298 17,218 (1,330) 19,081 6,121
Net Profit Margin (1.7%) (7.9%) 21.4% 0.5% 27.3% (2.2%) 31.2% 10.2%
Cash from 36,215 11,442 19,917 22,732 38,123 21,133 61,542 28,090
Operations
Cash 14,507 10,433 8,388 27,100 18,466 47,252 20,953 57,482
Trade Receivables 22,673 938 31,667 9,943 34,465 10,039 20,337 10,136
Days Receivable 160 7 204 62 200 62 121 62
Total Debt 291,379 305,346 272,595 289,953 261,125 276,690 241,590 259,136
Debt Service 21,615 23,667 30,178 31,834 26,259 28,967 28,987 32,384
Equity 118,953 128,131 134,861 126,300 151,870 122,886 140,284 125,725
DSCR* 1.7x 0.5x 0.7x 0.7x 1.4x 0.7x 2.1x 0.9x
Debt/Equity Ratio 2.4x 2.4x 2.0x 2.3x 1.7x 2.2x 1.7x 2.1x
*Debt Service Cover Ratio

10. When the FIT scheme was implemented in 2014, the FIT-All rate approved by ERC was
only ₱0.04/kWh because of concern that there would be a public outcry, and this rate remained
in effect until April 2016. In addition to this low rate, FIT eligible renewable energy power
projects were higher than anticipated (target of 750 MW of renewable capacity vs actual
renewable capacity of 1,400 MW) and electricity spot prices were lower than anticipated, which
widened the differential between the spot price and the FIT rate to be paid by Transco. All these
factors combined resulted in insufficient funds in the FIT-All fund. In calculating the
recommended FIT-All rate, Transco uses the average spot rate for the past 36 months. The
market price of electricity, however, has declined since 2014, thus resulting in a higher
estimated spot rate and underestimation of the recommended FIT-All rate. 7 Consequently,
Transco was unable to settle on time its obligations to FIT eligible operators and had to pay
penalty interest for the delayed payments. To address the issue, ERC adjusted the FIT-All rate
to ₱0.1240/kWh effective April 2016, ₱0.1830/kWh in May 2017, and ₱0.2563/kWh in June
2018. With the higher FIT-All rate collected in 2018, Transco managed to pay all overdue FIT
allowances to the renewable energy operators including interest. Transco estimates that, even
at ₱0.2226/kWh, the FIT-All rate effective April 2019, the fund will still be able to service all
payables.8 The fund currently has a surplus of ₱1.0 billion.

11. The FIT implementation issues caused EBWPC’s receivables from Transco to balloon
to $34.5 million--equivalent to 200 days receivable—in 2017 and caused concern about a
potential strain on EBWPC’s liquidity. The liquidity issue was underscored in 2016 when

6 In 2016, EBWPC started using the USD as its functional currency and financial statements are reported in USD.
The company effected the change in functional currency after the finalization of its financing scheme and
determined that the USD is the currency that mainly influences its operating expenses and financing activities. In
accordance with Philippine Accounting Standards (PAS) 21, The Effects of Changes in Foreign Exchange Rates,
the effect of the change in functional currency was accounted for prospectively. The change in functional currency
resulted in an $8.4 million exchange difference, which was presented as part of the cumulative translation
adjustment in the statement of financial position. For Table 1, the RRP projections were converted to USD using
the foreign exchange rates assumed in the financial model for each year.
7 Average electricity price per kWh: 2013-₱6.12; 2014-₱4.90; 2015-₱3.83; 2016-₱2.95; 2017-₱3.35.
8 Information about the FIT-All rates was provided by Dinna Dizon, Manager-Compliance Management Department,
FIT-All Fund Administrator, Transco, during a meeting on 7 June 2019.
 5

receivables from Transco reached $31.7 million and at the same time the debt service coverage
ratio dropped to 0.7x. With the improvement in the FIT-All fund’s liquidity, EBWPC’s receivables
from Transco have now been reduced to approximately $10.0 million (60 days receivable)
during the first quarter of 2019, and its debt service coverage ratio recovered to 2.1x in 2018.

12. ERC has acknowledged the protracted delay in confirmation of the FIT rate increases
proposed by Transco annually, but has still not approved a price increase.9 The delay has been
due to a change of commissioners in 2017 and a review of the methodology approved under the
FIT rules, which, for example, allow a tariff adjustment for foreign exchange changes,
regardless of the local currency contribution to a project’s cost. ERC is consulting stakeholders
and experts on the proposed changes to the methodology for calculating the FIT rate increase
and will update the data prior to presentation to the ERC commissioners. Two approaches are
under consideration: (i) introduction of an individual tariff for each project based on its operating
expenses, capital, and foreign exchange structure, or (ii) using a model project with the share of
foreign exchange based on 60% foreign currency-denominated debt and a debt/equity ratio of
70/30. The latter was used in the calculation of the base FIT rate. Confirmation of the adjusted
FIT rate is not expected until 2020.

II. EVALUATION

A. Project Rationale and Objectives

13. ADB’s participation in this financing is consistent with ADB’s Strategy 2020, which calls
for ADB support to clean energy development to meet the growing energy demands in the
region in a sustainable manner and a larger role for the private sector in infrastructure
financing.10 The project, which uses wind energy, displaced coal-fired power plants that have
greater greenhouse gas (GHG) emissions. It is also aligned with the Philippine country
partnership strategy, 2011-2016, which prioritizes investments in renewable energy
development and aims to help the country achieve high, inclusive and sustainable growth.11 The
project is also consistent with ADB’s Energy Policy as it will result in increased dependable
capacity from renewable energy resources, which will help ensure energy security and facilitate
the transition to a low-carbon economy .12

B. Development Impact

1. Contributions to Private Sector Development and ADB’s Strategic

Development Objectives

14. The successful financing of the project helped spur the development of more wind farm
projects. After Burgos and Bangui Bay Wind Power Project with aggregate installed capacity of
201 MW, four more wind power projects with total capacity of 225 MW were developed in 2014
and 2015 and awarded FIT eligibility. Total wind power installed capacity has reached 427 MW,
contributing to the country’s energy security. From the time of ADB’s participation in the

9 Transco has proposed the following FIT rates for the wind power operators included in the initial installation target
of 200 MW subject to ERC confirmation: 2016 – ₱8.9006/kWh; 2017 – ₱9.1869/kWh; 2018 – ₱9.5474/kWh; 2019 –
₱9.9808/kWh; and 2020 – ₱10.1887/kWh.
10 ADB. 2008. Strategy 2020. The Long-Term Strategic Framework of the Asian Development Bank, 2008-2020.

Manila.
11 ADB. 2011. Country Partnership Strategy: Philippines, 2011-2016. Manila.
12 ADB. 2009. Energy Policy. Manila.
6

financing until 2018, the project has delivered 1,321.5 GWh of electricity to the grid, translating
into around 894,000 tons of carbon dioxide equivalent emissions avoided or an average of
223,500 tons per annum. The project also benefits the community in which it is located. As of
end-2018, it has 35 full-time Filipino employees (26 men and 9 women). During the construction
phase, the project generated 976 local jobs, including 928 through the contractors. The project
also (i) benefited the local economy through the purchase of goods and services during
construction, which amounted to ₱9.1 billion ($193.5 million), and (ii) provides livelihood
programs, educational assistance, and environment-related projects in the local community.

2. Environment, Social, Health, and Safety Performance

a. Environment

15. The project was classified as category B for the environment. Since it was already under
construction when ADB financing was considered, a compliance audit was undertaken and an
Environmental and Social Action Plan was developed to address any non-compliance with the
ADB Safeguard Policy Statement 2009. As of March 2017, all matters within the Environmental
and Social Action Plan had been closed and the company had developed and implemented an
effective Environmental and Social Management System.

16. An Initial Environmental Examination (IEE), with an associated Environmental

Management Plan, was prepared as required for an environment category B project. The IEE
covered the wind farm site including all turbines, access roads, two substations, and ancillary
facilities. The IEE was publicly disclosed in January 2015. A separate IEE was developed for
the 115-kV transmission line and temporary jetty, as this infrastructure was not included in the
main report. The second IEE was finalized in July 2015.

17. Key potential environmental impacts during the operational phase were health and
safety, noise, shadow flicker, bird and bat strike, as well as air quality, water quality, and waste
management. The company has a target of zero incidents per year and has a clean health and
safety record. Some exceedances of international standards for noise and shadow flicker have
been recorded, but these are being managed and no grievances have been lodged by the
community. Strike monitoring is conducted daily. Some common birds and fruit bats have been
found on site, but no threatened or endangered species. The company also monitors air quality
and water quality, and these are within limits. EBWPC is proactively managing the
environmental risks of the project. The institutional systems, capacity, and commitment of
EBWPC to manage the environmental impacts are deemed adequate. Details of the
environmental impact are in Appendix 4.

b. Social Safeguards

18. The project was classified as category B for involuntary resettlement and category C for
indigenous peoples under the ADB Safeguard Policy Statement 2009. The social compliance
audit confirmed that the land acquisition process undertaken by EBWPC prior to ADB
involvement complied with the national requirements. EBWPC has also incorporated in its
environmental and social action plan measures and actions required by ADB to comply with the
Safeguard Policy Statement with respect to involuntary resettlement. The project maintains a
good relationship with its host communities through providing livelihood assistance to affected
residents and legal advice to residents with outstanding land ownership issues. It also
implements Corporate Social Responsibility projects, which include capability building programs
for local government officials, adopt-a-school program, and health and sanitation projects. Of
 7

the current 156 individuals employed by EBWPC and its contractors, 112, including 19 females,
are from the local communities. Through the Energy Regulations 1-94 (ER 1-94) benefit sharing
program, the project has contributed at least ₱2.6 million to support the community-based
projects of the host barangays (smallest administrative division in the Philippines), municipality,
and province.13 Details of the project’s social impact are in Appendix 5.

3. Business Success

19. The project has demonstrated strong overall operating and financial performance
through 2018, supported by favorable weather conditions. Notwithstanding the absence of any
FIT rate increase, EBWPC remains profitable with a strong EBITDA—earnings before interest,
taxes, depreciation, and amortization—and net profit margins, especially in 2017 and 2018. The
company’s profitable operations translated into strong cash flow and liquidity despite the rise in
FIT receivables from Transco. This is evidenced by its debt service coverage ratio of 1.4x in
2017 and 2.1x in 2018. The company was also able to pay out total cash dividends of $32.8
million in 2018. As of March 2019, the EBWPC collects its revenues on time and is now aligned
with the two-month billing and collection cycle. Receivables from Transco have been
substantially reduced to around $10.0 million for an acceptable level of 60 days receivable as of
March 2019. The FIT-All fund now has surplus liquidity and, with the current approved FIT-All
rate, Transco is confident that it will be able to cover all payables due to the eligible renewable
energy operators. In addition, ERC is now taking up the recommended FIT rate increases and a
FIT rate increase will likely be confirmed in 2020. Going forward, EBWPC’s profitability and cash
generation are expected to remain stable and sufficient to cover maturing debt obligations. The
sector overview is in Appendix 3.

C. ADB Additionality

20. ADB provided guidance to EDC and EBWPC on the environment and social safeguards
even when the project was still in the development stage. ADB’s participation also helped bridge
the project’s financing gap. The other ECA and USD Commercial Debt facility lenders agreed to
step up their commitments knowing that ADB’s approval was just delayed and it would
eventually come in and assume part of their exposure on a pro rata basis.

D. ADB Investment Profitability

21. Under the loan agreement, the interest margin received by ADB was approved by the
Investment Committee and deemed appropriate for this kind of risk. EBWPC has been making
principal and interest payments on schedule and, based on the updated projections, the
borrower will continue to service debt on time until final maturity. It should also be noted that the
debt is guaranteed by EDC and the guaranty is not expected to fall away until 2022. At the
same time, an offshore debt service reserve account covering both scheduled principal and
interest payments for the next six months is maintained with an offshore agent bank. ADB’s
return on its investment would have been greater if it had been able to participate in the
financing from the start and receive front-end and commitment fees.

13 The DOE promulgated ER 1-94 pursuant to Rule 29 of the Implementing Rules and Regulations (IRR) of EPIRA.
Under Rule 29, a generation company shall set aside one centavo per kilowatt-hour (₱0.01/kWh) of its total
electricity sales as financial benefit of the host communities of the generation facility,
8

E. ADB Work Quality

22. Screening, appraisal, and structuring. EDC first approached ADB for potential
financing of its wind farm project after passage of the Renewable Energy Act in 2008. Although
ADB could not commit to any financing until the FIT rules and its implementing guidelines were
in effect, the deal team provided guidance to EDC in addressing environmental and social
safeguards matters relevant to a wind farm project. When the DOE released the FIT
implementing guidelines and EDC started project construction, the deal team started processing
the financing proposal for Board approval so ADB would be ready to participate in the
refinancing of the project upon receipt of the COE. The deal team also worked with EDC and
other potential lenders in crafting the financing terms. EDC, being a major player in the power
generation sector and boasting a strong balance sheet, is deemed a prime client by most
lenders. Thus, when ADB’s approval process was delayed, the other lenders were ready to step
up to bridge the temporary financing gap. The deal team talked to the other lenders and secured
their commitment to sell down to ADB on a pro rata basis once ADB received Board approval.
Some lenders were already hesitant to sell down because the project was deemed to be a good
asset, but the deal team was able to convince them to honor their commitment.

23. Monitoring and supervision. The deal team closely monitors EBWPC’s operating and
financial performance through regular communication and follow-up on the timely submission of
reports and financial statements. The company complied with all reporting requirements in a
timely manner. ADB has also been prompt in giving its consent to waivers and requests for
amendments of existing agreements and has also met with both ERC and Transco to gain a
better understanding of the FIT implementation issues.

III. ISSUES, LESSONS, AND RECOMMENDED FOLLOW-UP ACTIONS

A. Issues and Lessons

24. The project’s favorable operating and financial performance through 2018 cannot be
attributed to ERC and Transco. These government agencies would benefit from improving their
process in approving the FIT-All and FIT rate escalation to gain the confidence of debt and
equity investors, especially for new projects. Such action is vital to support the eligible
renewable energy operators and ensure the success of their projects as well as the
government’s program to increase the share of renewable energy in the country’s power
generation mix. A coordinated institutional effort is recommended to convey ADB’s concerns to
the appropriate government officials. The deal team must maintain regular communication with
both ERC and Transco.

25. The ERC is conducting a review of the methodology approved under the FIT Rules,
which, for example, allows tariff adjustments for foreign exchange changes regardless of the
local currency contribution to a project’s cost. ERC has started to discuss and evaluate with
stakeholders and experts the proposed changes to the methodology in calculating the FIT rate
increase and to update the data prior to presentation to the ERC commissioners.

26. ADB’s participation in the financing was delayed and put at risk because of the
Investment Committee’s requirement to post the project’s safeguard documents on the ADB
website. EDC did not agree to this condition because of the confidential information in the
documents and the stiff competition for FIT eligibility. The sponsor was willing to do it after
securing FIT eligibility. The Investment Committee should have considered the situation and
made an exception. The documents were disclosed to ADB in the first place and no issues were
 9

identified. As a result, ADB’s participation in the financing was delayed by a year and ADB also
missed out on the front-end and commitment fees payable to the lenders.

27. Transmission line congestion is a major challenge to renewable energy developers in

the Philippines as key stakeholders do not yet have capacity to manage significant percentages
of intermittent supply. ADB could consider (i) screening grid reliability (independently from the
regulator) for renewable energy projects, and (ii) undertaking potential programs with key
stakeholders in building the capacity to manage higher shares of intermittent supply, including
grid-scale energy storage options.

B. Recommendations and Follow-Up Actions

28. The deal team should maintain regular contact with the ERC and Transco and get
updates on the approval of FIT rate increases. The deal team could also coordinate with the
Southeast Asia Regional Department (SERD) in approaching the relevant Philippine
Government officials to discuss ADB’s concerns with respect to FIT implementation.
10 Appendix 1

PROJECT-RELATED DATA

Table A1.1: Investment Identification

1. Country Philippines
2. Project Number P48325
3. Loan Number 3246
4. Type of Business Wind power generation
5. Project Title 150 MW Wind Farm Project
6. Investee Company and/or Borrower EDC Burgos Wind Power Corporation
7. Amount of Approved ADB Assistance $20.00 million

Table A1.2: Investment Data

1. Concept Clearance Approval 28 July 2014
2. Date of Board Approval 26 January 2015
3. Signing Date of Accession Agreements 10 November 2015
4. Date of Loan Effectiveness 10 November 2015
5. Amount and Date of Initial Disbursement
ECA Debt Facility 15 December 2015
USD Commercial Debt Facility 15 December 2015

Table A1.3: Summary of Project Cost and Funding Sources

RRP Amount Actual Amount Share of Total
($ million) ($ million) (%)
Project Cost
Pre-development Expenses 13.8 13.8 3.1
Land and ROW Expenses 5.9 5.9 1.3
Developer’s Fee 10.3 10.3 2.3
Power Plant Construction 350.6 350.6 77.9
Substation Construction 15.4 15.4 3.4
Transmission Line Construction 17.1 17.1 3.8
Construction Related Expenses 18.0 18.0 4.0
Construction Insurance 2.3 2.3 0.5
Financing Costs 27.6 16.6 3.7
Total Project Cost 461.0 450.0 100.0
Sources of Funds
Equity 138.3 135.0 30.0
Debt
ADB Direct Loan 20.0
ECA Debt Facility 155.2 150.0 33.3
USD Commercial Debt Facility 18.8 37.5 8.3
Peso Commercial Debt Facility 128.7 127.5 28,3
Total Debt 322.7 315.0 70.0
Total Sources of Funds 461.0 450.0 100.0
Source: ADB. 2015. Report and Recommendation of the President to the Board of Directors: Proposed Loan to EDC
Burgos Wind Power Corporation 150-Megawatt Burgos Wind Farm Project (Philippines). Manila.
 Appendix 2 11

RESULTS AND RATINGS FOR PROJECT CONTRIBUTIONS TO PRIVATE SECTOR

DEVELOPMENT AND ADB STRATEGIC DEVELOPMENT OBJECTIVES—INFRASTRUCTURE
Results area Actual achievements Justification Potential future
achievements
1. Within company PSD effects
1.1 Improved skills. New or Developed stronger engagement skills with EBWPC implemented Continuous
strengthened strategic, landowners in the land acquisition process measures to gather and engagement with
managerial, operational, address landowners’ affected landowners
technical or financial skills Capacity building of inhouse employees concerns and provided and resolution of the
consistent legal remaining 93 lots
Undertook CSR activities like capability building assistance for involving unsecured
program for local government officials and staff, landowners with land land with
adopt-a-school program, and health and sanitation ownership issues. expropriation cases
projects
Inhouse employees are
also being trained by
Vestas and First
Balfour.

EBWPC staff also made

strides in CSR activities
and the public
consultation process.

1.2 Improved business Strong profitability and stable cash flows despite O&M contracts with Contracts are
operations. Improved ways to the absence of a FIT rate increase Vestas and First Balfour expected to be
operate the business and ensure smooth operation renewed.
compete, as seen in investee of the plant and Nonetheless,
operational performance against transmission line. inhouse employees
relevant best industry are also being
benchmarks or standards trained by Vestas
and First Balfour.
1.3 Improved governance. As Built stronger stakeholder relations with the host Effective Close the
evident in set standards related communities and affected landowners implementation of remaining
to corporate governance, grievance redress community
stakeholder relations, EHS fields, Livelihood restoration plan implemented to mechanism and grievances recorded
and/or energy conservation, and mitigate the impacts on affected and economically stakeholder in the grievance log.
their implementation vulnerable households and monitored consistently engagement plan Widen the scope of
existing community
CSR programs implemented in partnership with Ten economically engagement
the barangay, municipal, and provincial LGUs of vulnerable households activities: conduct
the host communities were compensated community-wide
through the livelihood consultations at
restoration plan. To least once a year for
date, 5 households each of the 3 host
have realized benefits barangays
since its implementation encompassing the
in 2016. wind farm, in
addition to the
₱18,766,961.66 has regular consultation
already been spent on with the LGUs.
CSR programs since
2014, primarily Improve the existing
benefiting the monitoring system
communities of to include
barangays Saoit, information
Nagsurot, and on whether the
Poblacion. Implemented status of affected
capability building poor and vulnerable
program for LGU households has
 12 Appendix 2

Results area Actual achievements Justification Potential future

achievements
officials and staff, improved to at least
adopt-a-school national minimum
program, livelihood and standards.
human resource
training programs, and Continuously
health and sanitation implement CSR
projects. programs and
strengthen
measures to ensure
the sustainability of
the projects.
1.4 Innovation. New or O&M contracts with Vestas and First Balfour Vestas and First Balfour EBWPC is expected
improved infrastructure design, ensured proper operation of the project and risk possess the needed to renew the O&M
technology, and service delivery; allocation / mitigation. expertise to operate contracts.
ways to cover or contain costs, and maintain the power
manage demand or optimize plant and transmission
utilization; improved risk line.
allocation between private
companies and government;
financial structure, etc.
1.5 Catalytic element. $315 million syndicated debt financing Local and international The project’s strong
Mobilizing or inducing more local successfully raised to refinance project cost financial institutions operating and
or foreign market financing or participated in the financial
foreign direct investment in the financing. The project performance
company was the first to be ensures timely
granted FIT eligibility repayment of project
and benefits from a debt.
strong sponsor.
2. Beyond company PSD
effects
2.1 Private sector expansion. Total installed capacity of FIT eligible wind farm ERC’s implementation The DOE continues
Contribution by a pioneering or projects up to 427 MW of FIT guidelines to underscore the
low-profile project that facilitates encouraged more need for more
in its own right, or paves the way developers to pursue renewable energy
for, more private participation in development of sources in support
the sector and economy at large renewable energy of its fuel
projects. diversification. Up to
17,000 MW of
additional
renewable energy
capacity are
targeted through
2020.
2.2 Competition. Contribution of Lower energy cost as evidenced by a decline in New coal-fired plants to New generating
new competition pressure on the WESM spot rate come onstream are capacity is expected
public and other sector players to more efficient and to come onstream in
raise efficiency and improve Reliable capacity environment friendly. the next 5 years.
access and service levels in the New renewable energy
industry plants are not expected
to benefit from FIT or, if
ever, lower FIT rates.
2.3 Demonstration effects. High production efficiencies Renewable energy EBWPC is expected
Adoption of new skills, improved projects, especially to extend its O&M
infrastructure assets and wind farms, generating contract with Vestas
services, more efficient power close to the P50 to ensure operating
processes, maintenance level. O&M contracts efficiency.
regimes, improved standards, with vendors promote
risk allocation and mitigation greater operating
beyond the project company efficiency.
2.4 Linkages. Relative to ER 1-94 remittance and engagement with the As of March 2019, While waiting for
 Appendix 2 13

Results area Actual achievements Justification Potential future

achievements
investments, the project LGUs in processing claims ₱5,252,800 had been DOE’s policy
contributes notable upstream or remitted to DOE. issuance on claim
downstream linkage effects to EBWPC conducted a processing,
business clients, consumers, series of orientation continue to provide
suppliers, key industries etc. in programs to the LGUs assistance in
support of growth. on the mechanics to preparing the
claim benefits from ER required documents.
1-94 and assisted the Once claims are
LGUs in preparing being processed,
documentary monitor progress
requirements to process and extend the
claims. necessary technical
support for the
implementation of
LGU plans and
programs.
2.5 Catalytic element. Power projects continue to receive financing The strong liquidity of Local banks have
Mobilizing or inducing more local support from local and international banks. domestic banks allows been aggressive
or foreign market financing or them to provide longer and lead the
foreign direct investment in the term financing and offer financing of new
sector (beyond the company) terms competitive with power generation
through pioneering or catalytic the international banks. facilities.
finance ECA-guaranteed
facilities help attract
more international
banks to participate in
the financing similar to
EBWPC’s financing
structure.
2.6. Affected laws, The project demonstrated the financial viability and Implementation of the The Philippines
frameworks, regulation. sustainability of investing in a renewable energy FIT Rules encouraged needs more new
Contributes to improved laws project. more renewable energy power generating
and sector regulation for PPPs, developers to pursue capacity to address
concessions, joint ventures, and projects. Government increasing demand
build-operate-transfer projects; agencies like ERC need and replace old
and liberalizing markets as to be more pro-active in power plants. The
applicable for improved sector the implementation DOE is expected to
efficiency process. promote a more
favorable regulatory
environment to
incentivize power
developers.
3. Contribution to other ADB
strategic objectives
3.1 Sector development Total dependable capacity increased to 21,241 Power sector continues Up to 17,000 MW of
outputs. Contribution to other MW as of December 2018 with solar and wind to benefit from additional
sector development outputs and accounting for 740 MW and 427 MW, respectively. government support. renewable energy
outcomes not captured under capacity are
point 2, such as capacity or targeted through
network expansion 2020.
3.2 Sector development Improved energy security for the Philippines An offshoot of Increased installed
outcomes. Contribution to other continued government power generating
sector development outputs and Gross power generation nationwide reached support capacity with
outcomes not captured under 99,765 GWh in 2018. continued support
point 2, such as increased from the government
infrastructure utilization or
consumption, improved in-
country connectivity, improved
energy security
 14 Appendix 2

Results area Actual achievements Justification Potential future

achievements
3.3 Inclusion. Improved access Increased dependable capacity is helping to avert Reduced cost of solar Continued
to, availability or affordability of power outages. panels makes it the government support
infrastructure services for the energy source of choice is expected.
poor and other disadvantaged Solar power is being used in rural areas not for off-grid areas.
groups connected to the grid.
3.4 Job creation. Creation of The project provided employment opportunities EBWPC and its Continue to employ
additional sustainable jobs or and prioritized hiring of local residents. contractors currently local residents for
self-employment; distinguish employ 156 individuals technical positions
between jobs created within and on-site, of which 72% and skill-based jobs.
beyond the company are from the local Monitor if
communities. A lady contractors are
engineer from the informing the direct
municipality of Burgos impact barangays
was employed in early about the jobs
2019 and was deployed available for hiring.
in the technical team. Intensify job
During construction, postings in village
976 workers were hired. information centers
Human resource such as the
training was conducted barangay halls and
for 140 out-of-school barangay health
youths and most were centers.
hired during project
construction.
3.5 Environmental Renewable energy production offsets the need for The project has The reduction in
sustainability. Project net non-renewable energy generation, thereby delivered a total of GHG emissions will
impact on GHG emissions; any reducing GHG emissions. 1,321.5 GWh of continue for the life
other contributions to electricity to the grid of the project.
environmental improvements The company has planted indigenous trees to and this translates to
mitigate and offset the impacts of vegetation around 894,000 tons of
clearance during construction. carbon dioxide (CO2)
equivalent emissions
avoided. In 2017 alone,
the project’s operation
avoided 369,487 tons of
CO2 equivalent
emissions.

EBWPC has adopted The company is

1,738.66 hectares of seeking certification
DENR National from DENR that the
Greening Program restoration work is
areas for restoration. To complete and permit
date, the company has requirements have
assisted with the been met.
planting of 790,980
indigenous seedlings. The company may
They are also choose to continue
partnering with local the BINHI Progam
schools as part of the as Community
BINHI Green Legacy Social
Program. Responsibility.
3.6 Regional integration. N/A
Project contributions to regional
cooperation and integration by
facilitating trade, cross-border
mobility, cross-border power
supplies, etc.
4. Overall Ratingb
 Appendix 3 15

SECTOR OVERVIEW

A. Generating Capacity and Sources

1. As of 31 December 2018, the Philippines has total installed power generating capacity of
23,815 MW, but only 21,241 MW or 89.2% of total capacity is dependable. Fossil fuel remains
the dominant source, with coal- and oil-fired power plants accounting for 37.1% and 18.0%,
respectively, of installed capacity nationwide. Renewable energy, including geothermal and
hydro, accounts for 30.3% of total installed capacity. Gross power generation nationwide
reached 99,765 GWh in 2018. Fossil fuel-based plants accounted for 76.6% while renewable
energy contributed 23.4%.

Table A3.1: Generation Mix in the Philippines, 2018

Fuel Source Installed Capacity Dependable Capacity Electricity Generation
MW % MW % GWh %
Fossil Fuel
Coal 8,844 37.1 8,368 39.4 51,932 52.0
Oil Based 4.292 18.0 2,995 14.1 3,173 3.2
Natural Gas 3,453 14.5 3,286 15.5 21,334 21.4
Total Fossil Fuel 16,589 69.7 14,649 69.0 76,439 76.6
Renewable Energy
Geothermal 1,944 8.1 1,770 8.3 10,435 10.5
Hydro 3,700 15.5 3,473 16.3 9,384 9.4
Wind 427 1.8 427 2.0 1,153 1.2
Solar 896 3.8 740 3.5 1,249 1.2
Biomass 258 1.1 182 0.9 1,105 1.1
Total Renewable Energy 7,226 30.3 6,592 31.0 23,326 23.4
Total 23,815 100.0 21,241 100.0 99,765 100.0
Source: Department of Energy. 2019. 2018 Power Statistics. Manila.

B. The Luzon Grid

2. The Philippine electrical power grid is divided into three grids: Luzon (Northern
Philippines), Visayas (Central Philippines), and Mindanao (Southern Philippines). The Luzon
grid (location of the 150-Megawatt Burgos Wind Farm Project) is the largest with 16,550 MW of
installed capacity (69.5% of the total); dependable capacity is 14,973 MW—90.5% of total
installed capacity. Peak power demand growth in the Luzon grid is expected to grow by 4% in
2019 to 11.2 GW from 10.8 GW in 2018. Power demand is expected to surge on the back of
economic growth and a population increase. The country’s infrastructure program is contributing
to the growth in demand for electricity. The looming power shortage in Luzon is expected to
exacerbate in 2024 when the country’s indigenous natural gas production from its Malampaya
offshore well in Palawan falls significantly short of the gas requirement to run the three gas-
powered plants in Batangas with aggregate installed capacity of 2,880 MW. Nearly a quarter of
the electricity requirement of Luzon is sourced from these power plants.1

3. To address the looming power shortage, additional generation capacity needs to be

installed as soon as possible. The DOE estimates approximately 10,000 MW of new capacity
must be in place by 2022. The DOE also estimates that the country will need to triple the

1 ADB. 2018. Philippines Energy Sector Assessment, Strategy, and Road Map. Manila.
16 Appendix 3

existing installed generation capacity of 23,000 MW by 2040 to meet the country’s anticipated
energy needs and increase reserve margins.

4. Currently, two coal-fired plants with aggregate capacity of 1,200 MW are expected to
come onstream in 2019-2020. New projects with total capacity of 6,329 MW have been
approved and an additional 33,199 MW are subject to review. Although the intermittent nature of
power supply generated by renewable energy, particularly wind and solar, will not be a major
factor in addressing the supply problem, the DOE continues to underscore the need for more
renewable energy sources in support of its fuel diversification platform and the United Nations
Sustainable Energy for All initiative. Up to 17,000 MW of additional renewable energy capacity
are targeted through 2020, broken down as follows: hydro – 10,792 MW; solar – 4,081 MW;
wind – 1,039 MW; geothermal – 684 MW; biomass – 326 MW; and ocean – 26 MW.2

C. Regulatory Issues

5. Inaction by government agencies, specifically the Energy Regulatory Commission (ERC),

in approving new power projects is not helping the sector. For example, at least seven power
supply agreements filed by Manila Electric Company with the ERC since 2016 still await
approval. The ERC had a management vacuum when President Rodrigo Duterte suspended
four commissioners in 2016-2017, with two of them eventually resigning. New commissioners
have been appointed but they still need to study the issues, which has led to further delay in
approvals.

6. The management vacuum in ERC has also adversely affected the operating feed-in-tariff
(FIT) eligible renewable energy projects. Under the FIT Rules, the FIT rates are subject to
annual increases benchmarked on foreign exchange and inflation starting 2016. The National
Transmission Corporation (Transco) recommends the annual rate increase subject to ERC
confirmation prior to implementation. However, the ERC has yet to approve any FIT rate
increase. ERC is currently discussing with stakeholders proposed changes in the calculation of
the FIT rate increase and, once updated data have been collected, a presentation to the ERC
commissioners will be scheduled. No rate escalation may be expected until 2020.

2 Department of Energy. 2018. Philippine Energy Plan 2017-2040: Sectoral Plans and Roadmaps. Manila.
 Appendix 4 17

ENVIRONMENTAL IMPACT

A. Background

1. The Burgos Wind Farm Project involves the construction and operation of a 150 MW
wind farm in Burgos, Ilocos Norte, by the EDC Burgos Wind Power Company (EBWPC). The
project has 50 wind turbines, each with a capacity of 3.0 MW, along with a substation and
ancillary facilities. A 115-kV transmission line of 43 kilometers (km) in length was constructed to
convey the electricity from the site to the national grid via an existing substation located in
Laoag City, Ilocos Norte.

2. The components of the project are:

(i) Installation of 50 x 3.0 MW wind turbine generators and ancillary plant equipment;
(ii) Construction of a 115-kV transmission line, 43 kilometers (km) in length with 128
lattice-type transmission towers and 20 steel poles;
(iii) Construction of a substation in Burgos and the expansion of an existing
substation in Laoag City, Ilocos Norte; and
(iv) Construction of a temporary jetty for the transport of materials during construction.
3. Construction of the project was undertaken in two phases. The first phase consisted of
the installation of 29 wind turbines with a generation capacity of 87 MW, and the construction of
the transmission line and substation. Phase 2 consisted of the installation of an additional 21
turbines with a generation capacity of 63 MW. The 150 MW project was commissioned in
November 2014, prior to receiving ADB approval and financing in January 2015.

4. The project was classified as category B for environment under the ADB Safeguard
Policy Statement 2009 (SPS). Since the project was already under construction when ADB
financing was considered, a compliance audit was undertaken. An Environmental and Social
Action Plan (ESAP) was developed and agreed by ADB and EBWPC to address any non-
compliance issues that were identified.

5. An Initial Environmental Examination (IEE) was prepared as required for an environment

category B project. The IEE covered the wind farm site including all turbines, access roads, two
substations, and the ancillary facilities. The IEE was publicly disclosed in January 2015. A
separate IEE was developed for the transmission line and temporary jetty, in accordance with
ESAP requirements, as this infrastructure was not included in the main report. The second IEE
was finalized in July 2015.

B. Mission Review Findings

1. Environmental Capacity

6. EBWPC has an Environmental and Social Management System (ESMS) to manage

safeguards issues. The ESMS covers nine topics: policy; identification of risks and impacts;
management programs; organizational capacity and competency; emergency preparedness and
response; stakeholder engagement; external communications and grievance mechanisms;
ongoing reporting to affected communities; and monitoring and review.

7. The ESMS Compliance Monitoring Team comprises the site manager, pollution control
officer, environment technician, and a community relations officer. These personnel together
18 Appendix 4

ensure compliance with regulatory permits, lenders’ requirements, and implementation of the
ESMS.

2. Compliance with Government Permits

8. The project has been granted several environmental permits pursuant to regulatory
requirements from the Department of Energy (DOE) and the Department of Environment and
Natural Resources (DENR). This includes an Environmental Compliance Certificate (ECC) for
the wind farm; a Certificate of Non-Coverage for the transmission line, substations, and jetty;
permits to operate; forest land use agreements; tree cutting permits; and hazardous waste
permits.

9. A wind energy service contract was issued by the DOE to EBWPC on 14 September
2009 to develop the Burgos Wind Project in Ilocos Norte. The contract (DOE Certificate of
Registration No. WESC 2009-09-004) is valid for 25 years or until 2034, and is renewable for
another 25 years.

10. The first ECC for the project was granted by the DENR on 5 May 2000 (ECC-Ref No.
010005-05-0013-0302). This was for the initial 42-MW North Luzon Wind Power Project. On 13
August 2002, the ECC for the next phase was issued for the 80-MW North Luzon Wind Power
Project (ECC Ref No. 010208-13n0030-1405). In 2008, the two ECCs were amended by
merging them to reflect the larger rating capacities of up to 2.5 MW for each wind turbine. The
amended ECC was issued to EBWPC on 6 September 2010. Finally, in 2013, an ECC
amendment application was filed to reflect the potential 165-MW operation with 3.0 MW wind
turbines. The amended ECC was issued on 8 July 2013.

11. The Energy Regulatory Commission (ERC) issued the provisional authority to operate
the Burgos Wind Project on 18 December 2014.

12. The transmission line, substations, and temporary jetty were issued with Certificates of
Non-Coverage by the DENR between 2010 and 2013. The Certificate of Non-Coverage means
that the proposed project is not covered by the Philippine Environmental Impact Assessment
System, and therefore, the proponent is not required to secure an ECC prior to commencement
of operation.

3. Environmental Issues and Impacts

13. Since ADB approval and funding was provided after completion of construction,
environmental issues and impacts to be managed largely relate to the operations phase. The
key issues are summarized below.

14. Health and Safety. The company proactively manages health and safety, and has a
target of zero incidents per year. This has resulted in a clean health and safety record for both
EBWPC and contractors. Since project approval in 2015, there have been no fatalities or lost-
time injuries. The last incident was a hand injury sustained in June 26, 2014.

15. Air Quality. EBWPC conducts annual emissions testing for the back-up generators
located at the wind farm. This testing is conducted by an independent third party. The emissions
comply with national emission standards.
 Appendix 4 19

16. EBWPC calculates the greenhouse gas emissions (GHG) of its activities. The
quantification methodology is based on the World Resources Institute’s Greenhouse Gas
Protocol and the Intergovernmental Panel on Climate Change’s National GHG Inventories
Reporting Instructions. The operation of the wind farm offsets the need for alternative, non-
renewable power generation. Therefore, EBWPC is able to avoid the emission of around
223,500 tons of carbon dioxide into the atmosphere each year.

17. Water Quality. Water quality is monitored at four locations surrounding the site. During
preventive maintenance activities, water quality is monitored for oil and grease discharges (a
larger suite of parameters was monitored during construction). Results have so far indicated no
contaminated discharges from the site.

18. Turbine Noise. Noise monitoring is conducted monthly at seven locations on the edge
of the wind farm. During low wind speeds there are no exceedances in noise standards. 1
However, during high wind speeds, exceedances have been detected. This is purportedly due
to environmental sources such as rustling trees, insects, animals, people, and vehicles. During
the Extended Annual Review Report (XARR) mission in 2019, it was noted that some
monitoring sites may be located too close to turbines and may not accurately reflect noise levels
at the nearest receptor. Nevertheless, at least some short-term exceedances in noise levels
caused by the wind turbines appear likely. Monitoring for a longer duration may provide more
accurate results. Importantly, no community grievances have been received in relation to turbine
noise. EBWPC is conducting further studies on noise and on potential mitigating measures.

19. Shadow Flicker. The IEE predicted that shadow flicker could be a problem for between
38 and 57 households in the vicinity of the wind farm, and proposed community education,
monitoring, and, if necessary, mitigation measures.

20. In 2015, EBWPC commenced community consultation on shadow flicker including

distributing project information leaflets and providing information at local barangay halls. During
May and June 2015, a survey of 30 households located closest to the wind farm was conducted.
As a result of the survey, 7 out of the 30 households were found to be experiencing shadow
flicker for a maximum of 1 hour a day during sunrise. This potentially exceeds guideline values,
such as the World Bank Group Environmental, Health and Safety Guidelines, which
recommends no more than 30 hours of shadow flicker per year and up to 30 minutes per day.2
However, consultation with villagers indicates that it is not considered a nuisance and no
grievances have been raised.

21. Vegetation Clearance. The project is located within natural habitat and modified
habitats. It is not located within critical habitat. EBWPC holds a Tree Cutting Permit from DENR
to allow the clearance of vegetation. It also holds forest land use agreements covering 219
hectares of public forest land for the wind farm and 22.37 hectares for transmission alignment.
Around 100,000 m3 of earthworks was conducted during the construction of access roads,
turbines, and transmission towers, which included the clearance of native vegetation.

22. EBWPC has conducted both on-site and off-site replanting to mitigate for the clearance
of vegetation during construction. On-site replanting was not very successful because of the

1 As per the World Bank Group Environmental, Health and Safety Guidelines (2007).
2 World Bank Group (2015) Environmental, Health, and Safety Guidelines for Wind Energy. World Bank Group,
Washington.
20 Appendix 4

poor soil and harsh coastal conditions, along with grazing cows, horses, and goats on site. Off-
site, EBWPC adopted 1,738.66 hectares of DENR National Greening Program areas for
restoration. To date, the company has assisted with the planting of 790,980 indigenous
seedlings over three years. The company is awaiting a certificate from the DENR to confirm
successful completion of the replanting program in compliance with their Tree Cutting Permit.

23. EBWPC also joined the BINHI Green Legacy Program in August 2017. BINHI is the
nationwide greening program of the Philippines Energy Development Corporation. The aim is to
restore denuded forests and to rescue and secure 96 of the most threatened Philippine tree
species. In 2017, a tree planting activity was initiated with 14 partner schools in Burgos and
Pasuquin, Ilocos Norte, with additional schools engaged in 2018.

24. Bird and Bat Strike. Bird and bat strike monitoring is conducted daily as part of security
patrols, with results reported quarterly to DENR. Since 2015, no threatened and/or endangered
species have been found.

25. In 2017, one bird strike was recorded and three in 2018. Bats have been found in
previous years. The species collected include Philippine dove (Streptopelia dusumieri), pink-
necked green pigeon (Treron vernans), spotted dove (Spilopeli chinensis), cinnamon bittern
(Ixobrychus cinnamomeus), common moran, and fruit bats.

26. Bird flight deflectors were installed in one section of the transmission line in May 2017.
This is due to the presence of the Philippine duck (Anas luzonica), which is classified as
vulnerable by the International Union for Conservation of Nature.

27. Waste Management. The wind farm site has a hazardous waste store. Solid and
hazardous waste is collected by a third party registered with the DENR. The site also has a
septic tank and oil/water separator for treatment of liquid waste.

28. Temporary Jetty. The jetty was constructed by EBWPC’s contractor First Balfour. The
contractor also obtained all permits and approvals for the facility. This included a Special Tree
Cutting Permit and Special Earth Balling Permit for the transplanting of 25 bantigue trees
(Pemphis acidula). This coastal species is often collected from the wild for bonsai.

29. Consultation and Grievance Redress. EBWPC has established effective networks
with local communities and regulatory stakeholders and carries out a range of Community
Social Responsibility activities. The company has also implemented a Grievance Redress
Mechanism. Further details of the social impacts are in Appendix 7.

30. Reporting. EBWPC prepares monitoring reports for DENR and quarterly operations
reports for lenders. ADB has also been working with the company to prepare a stand-alone,
annual Safeguards and Social Monitoring Report that covers environmental and social issues.

4. Environmental and Social Action Plan

31. The IEE found that the project is compliant with Philippine legislation, but identified some
gaps between the project’s environmental and social assessment and management processes
and the requirements of the 2009 ADB SPS. An ESAP was therefore prepared.
 Appendix 4 21

32. As of March 2017, all matters within the ESAP were closed and it was confirmed that the
company ESMS had been implemented to ensure ongoing management and continuous
improvement throughout the operation phase of the project.

C. Conclusion

33. EBWPC is committed to proactively managing the environmental risks of the project.
The institutional capacity and commitment of EBWPC to manage the project’s environmental
impacts are deemed adequate and generally in line with SPS requirements and international
standards.
22 Appendix 5

SOCIAL IMPACT

A. Project Profile

1. The 150 MW Wind Farm Project of EDC Burgos Wind Power Corporation (EBWPC)
involved (i) the installation of 50 3.0 MW wind turbine generators (WTGs) within the 618 hectare
site located in barangays Saoit, Nagsurot, and Poblacion in the municipality of Burgos, Ilocos
Norte; (ii) the construction of a substation with three transformers; and (iii) the construction of a
43 km 115 kV transmission line traversing 29 barangays within the municipalities of Burgos,
Pasuquin, and Bacarra to connect to the nearest substation of the National Grid Corporation of
the Philippines (NGCP) located in Laoag City, Ilocos Norte.

2. Financing was approved by the Asian Development Bank (ADB) on 26 January 2015.
Since the land requirement for the project was secured by EBWPC in the early 2014, a third-
party social compliance audit was undertaken during project processing. This assessed the past
and present concerns related to the impacts on involuntary resettlement and indigenous
peoples, in accordance with relevant national laws and ADB Safeguard Policy Statement, 2009
(SPS 2009). The social compliance audit report confirmed that the land acquisition process
undertaken by EBWPC complied with the national requirements. The assessment results with
respect to ADB requirements on involuntary resettlement included the following recommended
actions: (i) formalize the establishment of a grievance mechanism and carry out wider
dissemination to community residents and stakeholders; (ii) organize barangay level
consultations to identify and resolve any outstanding issues on land rights acquisition; (iii)
provide legal support to all land owners with outstanding land issues; (iv) conduct a socio-
economic survey covering 33 households with material impacts; (v) implement a livelihood
restoration plan for land owners with more than 10% of productive lands affected by the project;
(vi) develop an action plan with the affected cattle-raisers occupying the pasture land within the
wind farm site; and (vii) implement the Information, Education, and Communication (IEC) plan to
ensure information disclosure and continued stakeholder engagement. These recommended
actions were incorporated into the environmental and social action plan (ESAP) previously
developed based on the environment and social due diligence conducted by other lenders.

3. The project was classified as category B for involuntary resettlement and category C for
indigenous peoples under the ADB SPS. The project site is situated on both public and private
lands with a total land area of 686 hectares. EBWPC’s rights to use the public land were
covered by Forest Land Use Agreements issued by the Department of Environment and Natural
Resources (DENR). For private lands, EBWPC avoided the acquisition of land titles and
preferred to enter into lease contracts with the landowners or through writs-of-possession or
orders of expropriation to lease using the Department of Energy’s (DOE) power of eminent
domain. No ethnic groups or indigenous communities are present in the project sites and the
project area is not within a legally recognized ancestral domain.

B. Review Findings

1. Compliance with Social Safeguard Requirements

4. Involuntary Resettlement. The wind farm affected 280 privately-owned lots and
EBWPC has acquired land use rights for 279 lots through lease agreements. The transmission
line encompasses an aggregate land area of 121 hectares affecting 1,867 private lots, of which
EBWPC has already entered into contracts of easements of right-of-way (CERW) with 1,769
landowners. Of the remaining 99 unsecured lots, 93 lots are being processed with expropriation
 Appendix 5 23

cases and 6 lots are currently being reviewed for exclusion since the recent land survey
confirmed that the project impacts are insignificant. Though EBWPC aimed to acquire land
rights through negotiated settlement, 1,622 lots underwent expropriation proceedings because
of land ownership issues. The Regional Court handling the expropriation cases established a
composite team to determine just compensation. The team is comprised of the Plaintiff
Commissioner, Municipal Assessors, and a representative from the local Bureau of Internal
Revenue, who reviews current land use and valuation and conducts onsite assessment of the
property. The land acquisition process for the project is covenanted in the Common Terms
Deed, which also includes the registration of secured lots to appropriate land use instruments
(LUI) and real estate mortgage (REM) registration.1 The LUIs for 1,331 lots have already been
released and registered, while the LUIs for 138 lots have been submitted for registration. Once
90% of the secured lots are LUI registered, EBWPC may proceed to the processing of REM
registration. Since most of the affected lots had outstanding land ownership issues, EBWPC
consistently provides legal assistance for the preparation of necessary legal documents and
notarization through the engagement of a local lawyer. EBWPC also established a Grievance
Redress Mechanism (GRM) coupled with intensive IEC activities to gather and address the
concerns of lot owners and affected communities.

5. The impact of the project on the cattle-raisers previously utilizing the lots within the wind
farm were mitigated by EBWPC through continuous engagement with the Burgos Agri-Business
Association (BABA). While BABA members were allowed to continuously use the area, a series
of planning workshops and trainings to improve the practices and capacity of BABA members
were conducted. The feedlot system for cattle fattening was introduced as an alternative to open
grazing; however, despite the introduction of this alternative, BABA members still prefer the
traditional way of grazing after realizing that the presence of wind turbines did not have negative
impacts on their livestock and that their cattle are safer inside the wind farm because of the
security measures imposed by EBWPC.2 The association also received 5 cattle for in-breeding
to support the livelihood of its members. BABA established a livelihood project of cattle in-
breeding, which still provides benefits to its members.

6. A survey to determine economically vulnerable affected persons within the transmission

line was conducted by EBWPC. From the 33 households identified with material impacts,11
households were initially assessed to lose more than 10% of their productive assets. A more
thorough house-to-house survey was conducted to further assess the eligibility of the initially
identified economically vulnerable households. Out of 11 households, only 10 were considered
eligible because the excluded household was assessed to own several hectares of land
producing 50 sacks of rice per cropping season, a tractor, and a public utility vehicle (jeepney
and tricycle). A livelihood restoration plan (LRP) was developed by EBWPC in consultation with
the vulnerable households and identified cattle dispersal and fattening as the most suitable
project, since the households were mainly engaged in agricultural activities and livestock
production. The distribution of cattle was completed within 2016 and a Memorandum of
Agreement between EBWPC and the LRP beneficiaries was executed, defining the rules and
responsibilities of both parties to ensure the sustainability of the project. To date, 5 households
have already realized benefits from the LRP. EBWPC continuously conducts monitoring
activities to record progress and to gather the concerns of the beneficiaries. The status of
implementation is being reported to ADB.

1 Section 2.3 (Perfection of Land Security) of the Common Terms Deed between the Transaction Parties and
Finance Parties dated 17 October 2014, as amended.
2 Interview with Mr. Oscar Baniaga, an officer of BABA, during the review mission.
24 Appendix 5

7. Indigenous Peoples. The project area encompassing the wind farm and the
transmission lines is not within a declared ancestral domain area and did not entail impacts on
any indigenous peoples’ communities.

2. Other Social Dimensions

8. Community Engagement. Based on the Stakeholder Engagement Plan (SEP),

intensive IEC activities were conducted in 2015-2017. These focused on the affected
landowners for land acquisition and on the host communities for environment-related concerns.
At present, an open line of communication has been established with the host communities’
local government units (LGUs) and engagement with the landowners is on an as-needed basis.
The CSR team often meets with the barangay councils of direct impact communities to discuss
plans and implementation of CSR programs. At the municipal level, CSR-related activities are
the focus of consultations and discussions with the line departments. Engagements with the
barangays traversing the transmission line are being undertaken as the need arises, but the
land team and the right-of-way (ROW) patrollers are frequently in touch with them. The CSR
team maintains a stakeholder engagement record, which has logged IEC activities conducted
since February 2015.

9. External Grievance Mechanism. This mechanism is also included in the SEP. All
employees are aware of the responsibility to receive community concerns, but the assigned
responsible groups are the CSR team, land team, environment and watershed management
team, security team, safety team, and ROW patrol. Concerns from the communities are being
gathered through SMS, e-mail, accomplished grievance forms, or verbal reporting. A grievance
log sheet maintained by the CSR team records concerns raised since October 2014. Though
EBWPC aims to promptly resolve concerns as soon as possible, the grievance log contains 11
outstanding issues received in 2015-2016, of which 6 were contractor-related concerns and 5
were land acquisition concerns on boundaries and legal ownership. During the review mission,
interviews with the surrounding communities confirmed that EBWPC has an open line of
communication with the communities.

10. Labor and Working Conditions. EBWPC ensures compliance with the Philippine Labor
Code and ADB’s social protection requirements. Recent inspection by the local labor regulatory
agency confirmed that EBWPC has no violations on general labor standards, occupational
safety and health standards, and social welfare benefits. The on-site human resource (HR)
team monitors the compliance of contractors with the labor laws. EBWPC and its contractors
provide benefits beyond the minimum requirements of the law such as provision of wages
above the minimum wage, a rice allowance, and health insurance. EBWPC also implements a
wellness program for its employees and conducts awareness-training programs on gender
sensitivity and on the prevention of sexual harassment in the workplace.

11. EBWPC and its contractors currently employ 156 individuals on site, of which 112 are
from the local communities. Only 19 females from the local communities are employed for the
project, constituting 17% of total employment. During the construction phase, the project had a
workforce of 976.

12. EBWPC adopts the HR policy of its parent company, Energy Development Corporation
(EDC). Following the ESAP, the HR policy of EDC was updated to include provisions on
compliance with the national laws as well as equal opportunities and non-discrimination in the
workplace. While EBWPC is in the process of establishing an on-site HR policy, it has already
 Appendix 5 25

developed its own Code of Conduct, which was disseminated to all employees. EBWPC has an
established Internal Grievance Mechanism to solicit employment-related issues and concerns of
its workers. The HR team maintains a grievance log of concerns and actions taken in resolving
each concern.

13. Social Development and CSR. Through its CSR program, EBWPC has implemented
projects that provide benefits to the local communities, including (i) capability building programs
for LGU officials and staff on the development of a tourism plan, disaster risk reduction
management, environmental sanitation, and solid waste management; (ii) an adopt-a-school
program; and (iii) health and sanitation projects. Also, in partnership with the Provincial
Government of Ilocos Norte and City Government of Laoag, EBWPC implemented livelihood
training, human resource training, and a sanitation program. The livelihood training benefited
281 community residents, of which 220 were women. For the human resource training, 140
school youths were trained and most were hired during the project construction phase. From
2014 to 2018, EBWPC’s accumulated expenditures on CSR reached ₱18,766,961.66.

14. Project host communities will also derive benefits from the Energy Regulations 1-94 (ER
1-94) benefit sharing program. Community benefits from ER 1-94 are calculated based on 1
cent per kilowatt hour of electricity produced by EBWPC. The total accrued amount will be
divided into 3 categories: 50% for the electrification fund; 25% for the development and
livelihood fund (DLF); and the remaining 25% for the Reforestation, Watershed Management,
Health and/or Environment Enhancement Fund (RWMHEEF). The electrification fund will be
utilized for the electrification projects of DOE while the DLF and RWMHEEF will be used to
support community-based projects of the host barangays, municipality, and province. As of
March 2019, the DLF and RWHEEF has already accumulated P2,626,400. However, since the
national regulatory agency is in the process of amending the policy, the processing of claims
was temporarily put on hold. Pending the release of the enabling law, EBWPC conducted a
series of discussions and training sessions for the LGUs of barangays Saoit, Nagsurot, and
Poblacion, as well as the municipality of Burgos, to train them in project planning and the
preparation of documentary requirements for the processing of their claims from the DLF and
RWHEEF.

C. Conclusion

15. EBWPC is committed to sustaining its accomplishments and improving the socio-
economic benefits of affected and host communities, while at the same time ensuring that
potential adverse impacts are addressed and mitigated. While the required activities in the
ESAP have already been achieved, EBWPC continuously reports project updates to ADB on the
status of land acquisition, implementation of the LRP, labor-related matters, stakeholder
engagement activities, CSR programs and projects, as well as undertakings related to the
processing of host communities’ claims from ER 1-94.