EDC PR 2016 (FS section)

Financial Statement
Burgos Wind Energy Project
In March 2013, the Company entered into an agreement with Vestas Wind Systems (Vestas) for
the construction of its 87-MW Burgos Wind Project (Phase 1), located in the Municipality of
Burgos, Ilocos Norte. The project comprises three components: (i) the establishment of a wind
farm facility; (ii) a 115kV transmission line; and (iii) a substation adjacent to the wind farm.
On April 30, 2014, the Company and Vestas have entered into another contract for the
construction and installation of an additional 21 wind turbines (Phase 2) increasing the total
generating capacity from 87 MW to 150 MW.
On November 12, 2014, EBWPC received the DOE’s Certificate of Endorsement (COE) for FIT
eligibility endorsing the 150-MW Burgos Wind Project for the purpose of qualifying under the
FIT System.
Upon completion of the Burgos Wind Project in 2014, the Company transferred a total cost of
₱16,241.2 million from the “Construction in Progress” account to completed property, plant and
equipment under the “Power Plants” account.
On April 14, 2015, EBWPC received the COC for its Burgos Wind Power Project - Phases I and II
granted by the ERC on April 13, 2015. The COC specifies that the project, having a total capacity
of 150 MW, is entitled to the FIT rate of ₱8.53 per kwh, subject to adjustments as may be
approved by the ERC, from November 11, 2014 to November 10, 2034.
In June 2015, a reassessment was made by the management which resulted to a change in the
estimated useful life of the Burgos Wind Power Plant from 20 years to 25 years.
Depreciation expense recognized amounted to ₱775.1 million, ₱678.8 million and ₱133.3 million
in 2016, 2015 and 2014, respectively, while the total revenue generated by the project amounted to
₱2,730.5 million, ₱2,354.3 million and ₱188.3 million in 2016, 2015 and 2014, respectively.
To partially finance the construction of Burgos wind energy project, on May 3, 2013, the
Company issued fixed-rate peso bonds amounting to ₱7.0 billion (see Note 17). The proceeds of
the bonds were used specifically for the construction of the Burgos Wind Project.
In addition, while the Company is arranging the permanent financing for the project, EDC entered
into bridge financing facilities (see Note 17).
On October 17, 2014, EBWPC secured US$315.0 million financing agreement with a group of
foreign and local banks representing the project financing for the construction of the 150-MW
Burgos Wind Project. The facility which consists of US dollar and Philippine peso tranches will
mature in 15 years. Part of the proceeds of this project financing were used to prepay the bridge
loan facilities.
Under the agreement of the EBWPC’s Project Financing, EBWPC entered into Mortgage
Agreement with Philippine National Bank, the Onshore Collateral Agent. The Mortgage shall
cover all of the assets of EBWPC whether such assets now exist or at any time hereafter come into
existence, or are now at any time hereafter acquired, and whether any such later acquisition is by
way of addition thereto or substitution of any component part thereof, together with all the rights
and interests therein.
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