Prospective lenders for power projects are batting for long-term off-take agreements to provide them certain level of comfort given industry transition jitters propelled by the changing terrain of the regulatory environment.

First Metro Investment Corporation (FMIC) president Francisco Sebastian has noted that “long-term contractual off-take agreements” will be among the critical factors that lenders will be looking for in project financing.

Lenders are similarly hankering for more timely approvals of rate applications since regulatory uncertainties appeared to be a lingering concern among interested investors.

All told, it was emphasized that project funders will seriously evaluate projects based on “future stream of predictable cash flows” as well as the commercial viability and the project’s scale at completion.

The other concerns revolve around added flexibility to sell in the Wholesale Electricity Spot Market (WESM) and for the projects to have “accessible and reliable fuel supply.”

Sebastian also underscored that projects must be anchored on well-established technologies with proven track record; especially so since social acceptability of certain technologies and unfamiliarity with the emerging ones can derail project implementation timelines.

The FMIC executive specified that banks are extremely liquid and that they are ready to lend to power projects as long as they can get familiar with the market risks.

In the domestic capital market, Sebastian noted strong possibility for non-recourse project financing of up to 12 years for new power projects.