The Lopez group is the leading private sector participant in the generation industry, with a total installed capacity of 3,200 MW, or 20% of the national grid. First Gen Corp (First Gen) is a Lopez-owned holding company and majority shareholder of 1000MW Sta Rita (First Gas Power/FGP Corp) and 500MW San Lorenzo (FGP Corp) Natural Gas plants in Batangas; 225MW Bauang Diesel in La Union (Bauang Private Power Corp), 1.6MW Bukidnon Hydro (First Gen Bukidnon Power Corp), 112MW Pantabangan-Masiway Hydro Plant Complex (First Gen Hydro Power Corp/FGHPC), EDC (Red Vulcan) and First Gen Renewables.
? 6MW Agusan hydroelectric – In June 2004, Lopez-led First Generation Holdings Corp won the bid for 6MW Agusan hydroelectric plant.
? 112MW Pantabangan-Masiway hydro – First Generation Hydropower Corporation (FGHPC) won 112MW Pantabangan-Masiway hydro in September 2006, with a bid of US$129M, topping Aboitiz Power’s offer of US$112M. PSALM will assign its MOA with the Protected Area Management Board (PAMB) to First Gen which will pay for the use of the Masiway land; PAMB will be responsible for the continued protection and maintenance of the area. In November 2006, First Gen began trading the electricity produced in WESM.
? 192MW Palinpinon I & II & 112MW Leyte (Kananga) Geothermal – PSALM had set the bidding date for 192MW Palinpinon I & II & 112MW Leyte (Kananga) Geothermal package in August 2009. A long-term Geothermal Resource Supply Contract is attached to the sale of the plants which use steam supplied by PNOC-EDC, now 60% owned by the Lopez group (and renamed EDC).
? 150MW BacMan I & II Geothermal – 150MW BacMan I & II Geothermal plants have long-term steam supply contracts with PNOC-EDC which would likely be attached to the sale.
? 235MW Bauang Diesel – The 235MW Bauang Diesel Plant has BOT contract with First Private Power (First Gen) will expire in July 2010.
? 610MW Leyte Tongonan A & B Geothermal (Unified Leyte) – Unified Leyte is operated by the EDC under a BOO-PPA contract till 2022-2023.
? 500M San Lorenzo & 1000MW Sta Rita CCGT – The $500M San Lorenzo CCGT facility is generating 500MW electrical power; the plant is adjacent to the Santa Rita Project. The complex is located in Batangas City, along the Batangas Bay, around 100km from Manila. This strategic location allows both plants to share common facilities such as the tank farm and fuel jetty, thereby eliminating the need to duplicate various operational facilities. The project's cost is estimated to be $500M inclusive of capital costs, working capital requirements, related pipeline financing, insurance and development costs; the finance was based on 75% debt and 25% equity structure. The EPC contract was a fixed-price turnkey, date-certain type contract with guarantees for completion and performance (heat-rate and output). The operational maintenance of the plant was awarded to Siemens Power Operations, Inc. (SPO), a 100% owned subsidiary of Siemens, Inc. in the Philippines. SPO manages, operates and maintains the plant and performs the services and obligations specified in the Operations and Maintenance Agreement. The San Lorenzo Project was commissioned by the First Gas Power Corporation (FGP Corp), which is owned by First Gas Holding Corporation (FGHC), BG plc, and Lopez, Inc. First Gas Holding Corporation has a 41.6% stake in FGP Corp; BG plc has a 23.4% stake and the remaining 35% stake belongs to Lopez, Inc. The San Lorenzo project played a critical role in establishing the Philippine natural gas industry; it is a beneficiary of the country's first natural gas production facility, in Palawan (developed by Shell). In December 2003, the owners of the Santa Rita and San Lorenzo power stations and MERALCO concluded a review of the Power Purchase Agreement (PPA) as mandated by the Electric Power Industry Reform Act (EPIRA). The owners and MERACLO have cooperatively reviewed the PPA and incorporated a number of incentives intended to encourage increased plant utilisation and subsequent efficiency gains.
First Gen – As of 30 March 2009, First Philippine Holdings Corporation (FPHC) held 68.6% interest in First Gen; it has an installed capacity of 2,357.4 megawatts as of December 31, 2008. Aside from winning Pantabangan-Masiway hydro and Agusan mini-hydro, First Gen also participated but lost in the bidding of Masinloc. First Gen decided to skip the final Calaca bid as it had then bagged the government's 60% stake in PNOC-EDC (now EDC), the biggest geothermal producer in the country, and second largest producer in the world, next only to the United States. In 2007, First Gen acquired a 60% controlling stake of EDC at P58.5B. First Gen plans to spend $1.375B over five years to build new power plants and expand their existing facilities.
Energy Development Corporation (EDC) – PNOC-EDC (now EDC) is an integrated geothermal steam and electric power producer with its core activities being the exploration, development, and production of geothermal energy. It is the largest company currently exploiting geothermal sources of energy in the Philippines, and is in transition to being a leading global large-scale clean renewable energy producer. PNOC-EDC began its commercial operations in 1984 as a government owned and controlled corporation tasked to accelerate the exploration and development of the Philippines’ indigenous energy resources. The company, formerly a subsidiary of Philippine National Oil Company (PNOC), became fully private in 2007 and is now majority-owned by First Gen Corp, through its wholly-owned subsidiary Red Vulcan Holdings. In 2008, EDC acquired Pantabangan hydro by buying 60% of FGHPC at US$105M. EDC had the hottest IPO in 2006; it is nearly risk-free as the demand for its product (geothermal steam and electricity) is guaranteed through several steam sales and power supply contracts.
? In November 2006, IFC made a US$50M equity investment in the PNOC-EDC as part of the state-owned enterprise’s initial public offering (IPO) on the Philippines Stock Exchange; the IFC investment supported the Philippine government’s goal of privatizing energy sector assets and expanding the geothermal energy sector. IFC invested US$49 million in newly issued common shares, acquiring 5.05% ownership in the IPO that took place on December 13, 2006. The divestiture of 40% of the government’s shareholding was a first step in the Company’s privatization as part of the Philippine government’s electric power sector reform plans. The IPO was successful, and the stock price rose 42% on the first day of trading. PNOC-EDC was subsequently privatized through a competitive sale of the government's shares to a strategic investor in November 2007. It was expected that with the success of the IPO and competitive selection of a new private sector majority shareholder, PNOC-EDC can both expand its development of local renewable energy projects and become a global player in the development of geothermal resources. In July 2008, IFC provided the now private EDC another US$100M loan (Php4.1B) to partially finance EDC’s medium term capital expenditure plan, oayable in 15 years with a 3-year grace period.
? EDC operates 12 geothermal steamfields in five geothermal service contract areas: Leyte Geothermal, Southern Negros Geothermal, Bacon-Manito Geothermal, Mindanao Geothermal and North Negros Geothermal. Power plant assets includes; 132.0 MW Upper Mahiao, 232.0 MW Malitbog, 180.0 MW Mahanagdong "A" and "B", and 51.0 MW Optimization Plants, all in Leyte; and 49 MW Northern Negros Power Plant. EDC is the acknowledged global expert in wet steamfield technology and has plans to expand its operation not only in the Philippines but in other countries where geothermal energy is abundant. In 2008, EDC completed the geoscientific assessment of the Tatapani project in India, and has a consultancy project in Iran; in Indonesia, EDC ranked the 256 geothermal sites in Sumatra, Sulawesi and Java.
? EDC has now also expanded its operations to power generation via its own power plants, and venturing into hydro and wind power generation; it is building a 30MW wind power plant in northern Luzon and is evaluating other wind and hydro investment opportunities in the Philippines. In 2008, EDC won the arbitration case against NPC for the Unified Leyte PPA disputes, which resulted in a favorable judgment to EDC in the total amount of Php2.9B.
? In June 2009, full operation and ownership of 106-MW Mindanao I and Mindanao II geothermal power plants were turned over to EDC from its BOT partners, when the 10-year BOT arrangement ended. The turnover of the Mindanao power plants will fully integrate the value chain of EDC’s geothermal business from steam production to power generation, like its Leyte projects. Marubeni Corp of Japan was one of two foreign groups which financed, designed and constructed the project under a BOT arrangement; Marubeni earlier bought out the other foreign BOT operator, Oxbow Power Corp (US). Mindanao I and Mindanao II geothermal started commercial operations in March 1997 and June 1999, respectively. The Mindanao plants are the last of the BOT plants turned over to EDC; in 2006 and 2007, EDC assumed operations of the Unified Leyte plants from California Energy and Ormat. The Unified Leyte plants consist of the 125-MW Upper Mahiao, 232.5-MW Malitbog, 180-MW Mahanagdong, and 50.9-MW Optimization geothermal power plants.
? In 2009, EDC will also bid to win the 3 NPC geothermal plants (Tongonan, Palinpinon and Bacman). EDC will also complete 4 CBAs consisting of FB, LGPF, BGPF and NNGPF, and offer its employees ownership of shares of stocks through the stock purchase plan.
Manila Electric Corporation (MERALCO) – The Lopezes control MERALCO, the biggest distribution utility in the Philippines which serves Metro Manila and a large part of Luzon. MERALCO controls a sizeable chunk of the electricity market (70% of the entire Luzon grid and 60% of the entire country). MERALCO’s supply contracts with its sister IPPs Sta. Rita and San Lorenzo power plants are singled out as classic cases of the disadvantageous nature of the cross-ownership provision of EPIRA. MERALCO has been accused of buying power from its affiliated IPPs at higher prices compared to the price charged by NPC. MERALCO had a 10-year contract for the supply of electricity from NPC beginning January 1995, but in 2002 it opted to buy some of its electricity from its IPPs instead of from NPC at prices higher than NPC’s.
NOTES:
Website contains company info and profile, related news and articles, and stockwatch. http://www.firstgen.com.ph/
http://www.psalm.gov.ph/news/NewsItem20060072.htm; http://www.psalm.gov.ph/news/NewsItem20060103.htm; http://www.psalm.gov.ph/news/NewsItem20060103.htm
Prior to the turnover to FGHPC, the sale of its generated power to the WESM was the responsibility of NPC. PSALM and NPC previously agreed that while PSALM would handle the trading activities of the NPC-IPPs, while NPC would take care of the trading for its own power plants. PSALM will eventually relinquish its role as trader in the spot market and pass this task to IPP administrators. The selection of IPPAs, like the present privatization structure for NPC generation assets, will be done through public bidding. http://www.psalm.gov.ph/news/NewsItem20060115.htm
Located in Valencia, Negros Oriental, the Palinpinon Geothermal Power Plant consists of two power stations — Palinpinon I and II — which are approximately 5 km apart. Palinpinon I, which was commissioned in 1983, comprises three 37.5–MW steam turbines for a total rated capacity of 112.5 MW. Palinpinon II consists of three modular power plants: Nasuji, Okoy 5, and Sogongon. The 20MW Nasuji was commissioned in 1993, while the 20MW Okoy 5 was commissioned in 1994. Sogongon, which consists of the 20MW Sogongon 1 and 20MW Sogongon 2, was commissioned in 1995. Situated in Sitio Sambaloran, Barangay Lim-Ao, Kananga, Leyte Province in Eastern Visayas, the Tongonan Geothermal consists of three 37.5MW units which were commissioned in 1983. The Palinpinon plant was previously packaged with the 146.5MW Panay Diesel Power Plant in September 2007. But since the long-term steam supply agreement to be attached to the Palinpinon plant still had to be approved by the Joint Congressional Power Commission, the PSALM Board decided to move the sale of the geothermal asset to 2009. In June 2008, PSALM Board approved the de-coupling of the Palinpinon-Panay package to address the issue on the Geothermal Resource Supply Contract (GRSC) of the Palinpinon plant. http://www.psalm.gov.ph/news/NewsItem20090018static.html; http://www.psalm.gov.ph/news/NewsItem20070213.htm; http://www.psalm.gov.ph/for%20bid%20plant%20profile/profile_palinpinon.h... http://www.psalm.gov.ph/for%20bid%20plant%20profile/profile_tongonan.html
110MW BacMan I is located in Palayan Bayan, Manito, Albay approximately 18 km from Manito, Albay. 40MW BacMan II (Cawayan) is located in Barangay Basud, Sorsogon City; BacMan II (Botong) is located in Oisao, Sorsogon City and approximately 6 km south-southeast of BacMan I. http://www.psalm.gov.ph/for%20bid%20plant%20profile/profile_bacman.html
http://www.power-technology.com/projects/sanlorenzo/ ; http://www.napocor.gov.ph/generations/MY...; http://www.industcards.com/hydro-philipp... ; http://www.metts.com.au/bataan-nuclear-p... ; http://findarticles.com/p/articles/mi_m0...
First Gen to spend $1.4 billion for expansion, Bernardette S. Sto. Domingo BusinessWorld, May 10, 2007
PNOC EDC now accounts for more than 60% of the country's installed geothermal capacity of 1,905 MW. EDC's total production of 1,150 MW comes from its geothermal streamfields in Leyte (also the world's largest wet steamfield), Negros Oriental, Negros Occidental, Bicol and North Cotabato. EDC had also recently won the arbitration case against NPC for the Unified Leyte PPA disputes, which resulted in a favorable judgment to EDC in the total amount of Php2.9 billion. http://www.energy.com.ph/ ; http://www.ifc.org/ifcext/spiwebsite1.nsf/c9aba76ed1df1938852571c400727d...
(a) Steam Sales Contracts – The purchase of the geothermal steam produced by EDC is guaranteed (more than 70% of the plants’ rated capacity) through the take-or-pay provision in the contracts between EDC and all NPC plants that utilize EDC’s steam supply (Bacman, Palinpinon, Tongonan). (b) Power Supply Contracts – The purchase of the electricity generated by all power plants owned by EDC is guaranteed by PSALM through take-or-pay provision in their contracts, e.g., Leyte Geothermal Plants (contract until 2021/2022) and Mt Apo Geothermal Plants (contract until 2022). This guaranteed revenue is the reason why EDC is one of the best stocks to buy for long-term investment and probably even for short-term. http://www.jcmiras.net/surge/p147.htm
This project used a new instrument that was developed jointly by the World Bank and IFC—Subnational Finance—to support well-run subnational entities, such as local governments and public economic enterprises, in their financing programs without the need for national government guarantees.
http://www.ifc.org/ifcext/sustainability.nsf/AttachmentsByTitle/p_CatalyzingPrivateInvestment_Introduction/$FILE/Introduction.pdf; http://www.ifc.org/ifcext/subnationalfinance.nsf/Content/Sampleproject7
http://www.ifc.org/ifcext/spiwebsite1.nsf/c9aba76ed1df1938852571c400727d... http://www.energy.com.ph/
http://www.jcmiras.net/surge/p161.htm; http://www.ifc.org/ifcext/pressroom/ifcpressroom.nsf/PressRelease?openfo...
Mindanao geothermal plant revived, 10/14/2008 http://www.gmanews.tv/story/126825/Mindanao-geothermal-plant-revived; Energy Development Corp. assumes ownership of 2 geothermal plants in Mindanao, June 20, 2009, http://www.tradingmarkets.com/.site/news/Stock%20News/2381520/
The cross-ownership provision in the EPIRA is weak. It allows a company or related group to own, operate, or control 30% of the installed generating capacity of a grid and/or 25% of the national installed generating capacity. This provision opens the possibility for a distribution company to enter into supply contracts with its generation subsidiaries, and create hidden profits for the conglomerate. Competition Policy and Regulation in Power and Telecommunications, Epictetus E. Patalinghug and Gilberto M. Llanto, Philippine Institute for Development Studies, Nov 2004
From state monopoly to de facto electricity oligarchy: A study of the development of privatization of NPC Assets, Freedom from Debt Coalition (FDC) Research paper (November 2008)
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FROM:
The Lopez Group (First Gen) in Philippine Power Sector
By Violeta P. Corral, PSIRU-Asia www.psiru.org, July 2009
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