Geothermal handbook: PlanninG and Financing power Generation t e c h n I c a L r e p o r t 2 / 2

Examples of Successful geothermal PPP Implementation
Off-Take Contracts 
Guaranteed by 
State
National Geothermal
Development Company

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the Philippine bot 
model. The Philippines is notable for its successful application of one particular 
form of PPP—that based on BOT contracts with private investors in geothermal power.
Indeed, BOT contracts are the main form of PPP that has contributed to the development and 
commissioning of more than 700 MW of geothermal power generation capacity. This has contributed 
substantially to bringing the Philippines into the second place (after the United States) in terms of 
installed geothermal capacity.
The first application of BOT-based geothermal PPP in the Philippines is attributed to the World-
Bank supported Leyte-Cebu Geothermal Power Project, where the construction of about 200 MW of 
geothermal power plants was to be implemented by a private firm through a BOT contract with PNOC 
EDC, the publicly owned national geothermal development company. For this component, PNOC EDC 
followed the BOT model which has come to be regarded as a typical private sector participation format 
(Figure 3.5). 
Under this BOT format, PNOC EDC performs the exploration and development of the geothermal field. 
For its part, the power plant contractor designs, supplies, installs and commissions the plant for a 
pre-determined cooperation period of 10 years. During the cooperation period, PNOC EDC pays for 
the plant through an energy conversion tariff (essentially a BOT fee) which covers operating costs, and 
provides for capital recovery and return on capital. Plant ownership is transferred and handed over 
to PNOC EDC at the end of the cooperation period. Finding commercial funding for the private BOT 
contractors was not a problem because the exploration (geothermal resource) risk and the off-take 
risk were clearly borne by the state through PNOC EDC and National Power Corporation (NPC), the 
national power utility. Furthermore, payments to the BOT contractor were backed by a government 
undertaking in case of default by PNOC EDC or NPC (Dolor 2006).