HEC ENERGY & FINANCE

Environmental and Social Aspects of Financing an Energy Project

May 2019
DISCLAIMER
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PURPOSE OF THE EXERCISE
The exercise is a theoretical case study aiming at getting you to think about what are key Environmental and Social
(E&S) aspects related to the development of an energy project , how they can be dealt with and what the financing
sector’s roles and tools can be.

BACKGROUND
Your company provides lending and investment services worldwide. It is committed to high environmental and social
standards and supports the energy transition. You have been approached by the company GeoPhile to be part of
the following opportunity.

INFORMATION MEMORANDUM (EXTRACT)

GeoPhile Inc. (GeoPhile) is a Philippines Stock Exchange-listed energy and services provider specialised in
developing and operating geothermal power plants. GeoPhile has won the bidding process launched by the
Philippines government to develop the 110MW Leon Geothermal Power Plant (the Project). Total Project Costs are
estimated to be approximately €550 million. Funding of the Project Cost will come from various sources and is
expected to include €220 million of non‐ recourse senior project finance debt provided by international commercial
banks, including signatories of the Equator Principles.

The Project is located approximately at 8°03'45.7"N 122°57'09.8"E, on the island of Mindanao in the Philippines.
The nearest village to Project facilities is Leon T. Postigo, 800m from well cluster #6. The Project consists of:
• Field facilities: those facilities required to produce, process, transport and deliver geothermal energy,
including well clusters, separators, interconnecting pipes (geothermal fluid and brine return), blow down,
vents
• Electricity generating facilities: those facilities including the units required for the conversion of geothermal
energy into electricity and for the delivery of such electricity to the point of interconnection, including steam
turbines, generator, transformer, cooling towers, and 65km high voltage transmission line;
• Associated facilities, including access roads, laydown area, workers accommodation, sanitary facilities

Project Location

Environmental and social considerations:

The Environmental Impact Assessment for the Project has been completed and approved by the Department of
Environment and Natural Resources on 16/05/16. Brine will be reinjected. Hydrogen sulphide emissions will meet
the required standards. Due consideration has been taken of Chloropsis flavipennis (Philippine Leafbird).

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QUESTIONS

1. What are the main potential environmental issues associated with the Project? (think of the Project’s
land take, controlled and uncontrolled emissions, indirect effects etc.)

2. What are the main potential social issues associated with the Project?

3. What can GeoPhile do to avoid, reduce, mitigate and compensate the E&S impacts?

4. What are the E&S related risks and issues for your company?

5. What can your company do to address these E&S risks in the context of credit decision? (think of E&S
standard requirements, the use of internal / external resources, definition of conditions to be included in
the Credit documentation)

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