DEPARTMENT OF FOREIGN AFFAIRS 
P R E S S  R E L E A S E
www.dfa.gov.ph                                                                                           2330 Roxas Blvd., Pasay City, Philippines                                                                                 Tel. No. 834-4000 
SFA-AGR-863-05                                                                                                                                                                                                                             07 December  2005

MAJOR GERMAN INVESTMENT SHOWS CONTINUED CONFIDENCE IN THE PHILIPPINES

07 December 2005 - Philippine Ambassador to Germany Delia Domingo-Albert met with STEAG AG last week on the occasion of the visit of Dr. Washington SyCip to Berlin from 25 to 26 November 2005 to discuss investments in the Philippines particularly in Mindanao.

Dr. SyCip is Chairman of the board of STEAG State Power lnc. (SPI), the company involved in the construction of a power plant in Mindanao.  STEAG AG, the fifth largest German power generator, owns 89% of the capital stock of SPI while State Investment Trust Inc (SITI) owns the remaining 11 %.

A major German investment, the USD 305 million STEAG project involves the construction of a 210mw coal-fired power plant in the PhlVlDEC Industrial Estate in Villanueva, Misamis Oriental covering an area of 55.42 hectares. The plant is expected to be commercially operational by December 2006. This is the third STEAG power plant built abroad, after Turkey and Colombia.

Ambassador Albert said a total of USD 201 million in primary loans is being made available for the Mindanao power plant project by an international banking consortium led by the Kreditanstalt for Wiederaufbau (KfW) and the Japan Bank for International Cooperation (JBIC) along with Hypo Vereinsbank AG. The long-term loans are covered against political risks for the borrowed capital by the German Garantie fur Kapitalanlagen m Ausland (GKA) (USD 100 million), JBIC (USD 60.6 million) and Japan's Nippon Export and Investment Insurance (NEXI) (USD 40.4 million).   In the Philippines, Banco de Oro provided a local peso loan of up to PHP 880 million (USD 15.8 million).

There are currently about 2,700 workers employed on the site, part of them experts of the contractor Kawasaki Heavy Industries, but the overwhelming majority of the workers come from the region.   The project includes social and environmental dimensions as well, with SPI involved in the construction of housing, reforestation and vocational training for villages around the area.

The project is one of the biggest direct foreign investments in the region and a crucial energy infrastructure project for economic growth in Mindanao.  Ambassador Albert expressed optimism that the project will spur further investments in Mindanao, including in mining and its related industries.  END
 

/jay