Tuesday, January 31, 2012

CSOs urge ADB to deny PHL loan for E-trikes

Business Mirror

INTERNATIONAL and local Civil Society Organizations (CSOs) on Tuesday urged the Asian Development Bank (ADB) to reject a government proposal to obtain a $101-million loan for an electric powered tricycles (E-trikes) project.
The CSOs said the ADB “railroaded” the project and did not hold any consultations with stakeholders. The loan will be obtained from the Clean Technology Fund (CTF) is one of two funds from the Climate Investment Funds (CIF) managed by the ADB.

The CSO’s said the Trust Fund Committe of the CTF is set to deliberate and approve the $101-million Revised CTF Investment Plan for the Philippines on Wednesday in Washington, D.C.

“I am appalled at the ADB’s continuing disregard of the people’s right to participate and have a say on how and where climate finance should be utilized. This demonstrates again the reverse ‘Midas Touch’ of the ADB. Electric public utility vehicles may be worthy of public support, but ADB manipulation is transforming good intentions into rubbish,” NGO Forum on ADB Executive Director Avilash Roul said in a statement.

In November, the ADB and the Department of Energy (DOE) presented the Revised Clean Technology Fund Investment Plan for the Philippines in Washington, DC.

In 2009 $125 million was allocated to renewable energy (RE) and energy efficiency program of the country. Under the revised plan, $24 million will be allocated for energy efficiency and $101 million for E-trikes.

“Subsidies for E-trikes are not needed, especially not for a project like this with a flawed design. Financing for RE and feed-in-tariffs are. The ADB has no business diverting money away from country priorities,” said Greenpeace Southeast Asia campaigner Francis de la Cruz. “There have been zero consultations on the fund diversion with the RE industry in the country. This is outrageous,” de la Cruz said.

Further, in a letter responding to an inquiry from the Freedom from Debt Coalition (FDC) last December, the Department of Energy (DOE) said the fund diversion was initiated by the ADB.

“The funding is being shifted by ADB from one project to another project which they feel is much more economical and has greater impact and more transformational,” the DOE letter stated.

The E-Trikes project of the ADB was criticized for the absence of disposal, after-sales services and replacement programs in the project design. This, local CSOs said would worsen traffic conditions in the country.

The ADB intends to utilize new electric vehicle technologies, particularly lithium ion batteries, in its E-trikes. The Associated Press recently reported the massive recall in the US of electric cars due to persistent lithium ion battery-related safety and maintenance issues.

“Instead of extending subsidized credit to E-trike manufacturers, the money should be used for innovative financing programs that dramatically lower the transition costs involved in shifting to renewable energy in the Philippines, which already has one of the highest power rates in the world,” FDC Power Coordinator Job Bordamonte said.

FPHC unit completes transfer of Meralco shares to PLDT

Business Mirror

LISTED First Philippine Holdings Corp. (FPHC) said on Tuesday it has completed the transfer of its shares in Manila Electric Co. (Meralco) to the PLDT Group.

In a disclosure to the Philippine Stock Exchange, FPHC said First Philippine Utilities Corp. (FPUC) transferred by means of a block sale its 2.66 percent or 30 million shares in Meralco to Beacon Electric Asset Holdings Inc. The sale is valued at P8.85 billion.

FPHC and FPUC, however, will continue to own approximately 3.9 percent of Meralco.

In a recent roundtable discussion with the BusinessMirror, Meralco Senior Vice President Alfred Panlilio said he is not aware if PLDT Chairman and Chief Executive Manuel Pangilinan will still opt to buy more Meralco shares from the Lopez group.

“If needed, he might buy some to cross 50 percent. As you know when Pangilinan acquires a company, he wants to own majority of it. Although today, we’re working as a block with the Lopez group; so it’s already beyond the 50 percent,” Panlilio said.

PLDT Communications and Energy Ventures (PCEV) earlier said Beacon will increase its stake in the power retailer to 48.02 percent from 45.36 percent. Beacon is owned by Metro Pacific Investment Corp. and (MPIC) and PCEV on a 50:50 basis.

Funding for the acquisition came from equity injection of P5.4 billion to which MPIC and PCEV will subscribe equally and a P5-billion corporate notes facility arranged for by First Metro Investment Corp. and PNB Capital and Investment Corp.

(Paul Anthony A. Isla)

First Pacific to complete Meralco share purchase

Manila Standard Today
by Jenniffer B. Austria

The First Pacific Co. Ltd. group is set to complete today the acquisition of an additional 2.66- percent stake in power retailer Manila Electric Co.

A special block sale involving 30 million Meralco shares is scheduled for execution at the Philippine Stock Exchange. The shares will be sold at P295 per share for a total value of P8.85 billion.

First Philippine Holdings Corp. of the Lopez Group last week said it agreed to sell a unit’s 2.66-percent stake in Meralco to Beacon Electric Asset Holdings Inc.

Beacon is owned 50 percent each by Metro Pacific Investments Corp. and PLDT Communication and Energy Ventures Inc.

The Lopez Group will retain one board seat in the country’s biggest electricity distributor after selling First Philippine Utilities Corp.’s 30 million shares although its ownership will drop to 3.9 percent.

The acquisition of additional shares in Meralco will increase Beacon’s beneficial interest in Meralco to 48.02 percent, solidifying its control of the utility.

Beacon prior to the transaction held approximately 45.36 percent of Meralco.

Power Sector Still Import-Dependent On Coal For Power Generation

Manila Bulletin
January 31, 2012, 8:00am

MANILA, Philippines — The country’s coal-fired plants still logged considerable jump in fuel importation last year given that domestic production cannot support the industry’s demand yet.

It can be gleaned from Department of Energy (DoE) documents that the power sector remains the biggest end-user of coal on its needs for electricity generation.

Despite the reported increase in the production of the Semirara Mining Corporation, it was gathered from energy officials that domestic supply is still very much in a ‘catch-up mode’ vis-à-vis demand.

The total volume of run-of-mine coal importation hovered at 10.96 million metric tons. Roughly 10.89 million MT were sourced from Indonesia; while 68,169MT were from Vietnam.

Total consumption in 2011 had been placed at 14.234 million MT; and the lion’s share went to the power sector at 10.58 million MT. The other major endusers are cement with 3.103 million MT of demand; while industrial and direct process firms cornered 550,838 MT.

DOE documents showed that indigenous coal production reached 7.611 million metric tons last year, and that should have been half already of domestic demand during the period. Concerns such as quality and technology compatibility, however, remained as hurdles when it comes to utilizing them for power plants.

Of the figure, P7.190 million MT accounted for the Semirara output. In the DOE documents, it was shown though that the company also targeted offshore markets as buyers, primarily China and Thailand.

The other domestic coal production areas are those in Zamboanga Sibugay, Cebu, Batan Island in Albay, Surigao and Negros, among others.

To pare the country’s dependence on imports in the coming years, the energy department has been aggressively enticing investments for coal exploration activities in various areas nationwide.

It has just offered around 30 blocks under Philippine Energy Contracting Round 4 (PECR-4), with hopes that these may eventually yield outputs of commercial scale.

Monday, January 30, 2012

German firm withdraws investment in Davao

By Jereco O. Paloma
Monday, January 30, 2012

DAVAO CITY – A German company pulled out a US$1 billion investment that was supposed to expedite the Waste-to-Energy (WTE) facility project in this city.

Herhof of Germany offered to invest in the city for a facility that would convert wastes to power, which the city can sell to a power distribution company.

City Mayor Sara Duterte did not go into the details on why Herhof backed out when the city has already sent two of its councilors to Germany to look into the feasibility of the proposed partnership.

The City Council earlier approved an ordinance authorizing the mayor to sign for and in behalf of the City Government the memorandum of understanding (MOU) with the Herhof for the proposed project.

Based on the passed ordinance, the technology that Herhof is offering to the city will lessen the detrimental effects of released greenhouse gases to the environment and will produce clean energy from waste.

The city will not also be spending anything for the establishment of the plant, as the main counterpart of the city is the area where the plant will be built.

In November 2011, Duterte sent Councilors Marissa Salvador-Abella and Arnulfo Cabling to Germany to look into Herhof's waste-to-energy technology. Herhof paid for their trip.

Abella and Cabling chair the council's committees on environment and housing and urban development, respectively.

After their visit, the councilors attested the effectiveness and efficiency of the waste-to-energy facility.

Despite the move of Herhof, Duterte remained unfazed because she said more foreign investors are interested to partner with the City Government on the same project.

The mayor added that 10 foreign investors have so far submitted proposals to pursue the WTE project in the city.

She added that the one with the best initial proposal yet is a Korean firm. But unlike Herhof’s proposal, the facility the Korean firm is offering would cost the city up to US$750 million. (Sun.Star Davao/Sunnex)

Published in the Sun.Star Davao newspaper on January 31, 2012.

SLIDESHOW: Anti-coal fun run in Subic

Philippine Star
By Anthony Bayarong Home Updated January 30, 2012 02:00 PM

SUBIC FREEPORT, Philippines – The following are collated photos of Anthony Bayarong during the anti-coal fun run in Olongapo City, where some 1,400 runners participated in opposition to the proposed 600MW coal fire power plant within Subic Bay Freeport.

Dubbed as Sikad Subic, the fun run was also participated by Greenpeace Philippines.

Please click here to view slideshow.

PSALM to start bidding out four power barges

By: Amy R. Remo
Philippine Daily Inquirer
10:03 am | Monday, January 30th, 2012

MANILA, Philippines – The state-run Power Sector Assets and Liabilities Management Corp. (PSALM) has finally set off the bidding process for the sale of its four diesel-fired Power Barges 101, 102, 103 and 104, hopefully marking the resumption of the much stalled privatization activities of the government.
According to PSALM’s invitation to bid document, the four facilities will be bundled in three packages, under which Package 1 will include PB 101 and 102, which are currently moored at Barrio Obrero, Iloilo City; Package 2 will only include PB 103, located at Estancia, Iloilo; and Package 3, for PB 104, which is at the Holcim Compound in Ilang, Davao City. Each power barge can generate 32 megawatts.
PSALM announced that interested parties have until February 14 to submit their respective letters of interest, while a pre-bid conference will be held later that month, on February 29. Due diligence on the four barges will be opened to prospective bidders starting February 1 until one week before the bid submission deadline. All bids, it added, should be submitted to PSALM by April 13.
The sale of the four power barges are expected to help stabilize the power supply in Mindanao, as the winning bidders will be mandated to transfer and station these facilities in the island for at least three years, until the proposed coal-fired power projects have started operations.
State-run National Power Corp. earlier bought these power barges from a Japanese firm, Hitachi Zosen Corp. Since they began operations, these barges had been moved about to help ease a severe power shortage in the Philippines, by providing required support in various regions in the Visayas and Mindanao.
Meanwhile, PSALM also announced that it was seeking for offers to supply and deliver P10.6 billion worth of fuel oil to for seven power facilities namely PB 101, 102, 103 and 104; the 149-MW Naga power plant complex in Cebu; the 100-MW diesel facility of Western Mindanao Power Corp. (WMPC) in Sangali, Zamboanga; and the 55-MW bunker fired power station of Southern Philippines Power Corp. (SPPC) in Alabel, Sarangani.
The amount, according to PSALM, is expected to cover the total fuel requirements of 286,780 kiloliters (Kliters) of these seven power plants.
The biggest fuel requirement will be for WMPC, which will require 101,500 Kliters worth P3.67 billion; followed by the Naga complex which will need 92,390 Kliters worth P3.54 billion; SPPC, 55,600 Kliters (P2.03 billion); PB 104, 18,550 Kliters (P722 million); PB 102, 6,830 Kliters (P248 million); PB 103, 5,960 Kliters (P217 million); and PB 101, 5,950 Kliters (P216 million).
A pre-bidding conference will be held on February 7. All bids should be submitted to PSALM by February 21.

Geothermal plants to go on stream this year

Lopez power unit to complete rehab of 2 facilities
By: Amy R. Remo
Philippine Daily Inquirer
2:55 am | Monday, January 30th, 2012

Energy Development Corp., the country’s biggest producer of geothermal energy, is set to finally complete within the year the rehabilitation of two geothermal complexes it acquired from the government, the 150-megawatt Bacon-Manito (BacMan) and the 305-MW Palinpinon-Tongonan power plants.
The completion of the rehab activities is expected to help shore up power supply and, at the same time, contribute to increasing the company’s electricity revenues.
According to EDC president Richard B. Tantoco, the BacMan facilities may start full operations by September this year to generate 130 MW. The geothermal facilities were practically inoperable, with a generating availability of only 3 percent when EDC acquired them from the government in 2010.
Tantoco admitted that they were “quite disappointed” as they were not able to complete the rehabilitation of BacMan in June last year, which he said was their “best case” assumption. However, the September target was still within the original schedule or what he called as the “base case assumption.”
“We started running one unit [of BacMan] last December. There are really some issues you will find in the unit after it hasn’t run in five to seven years. We ran it for 400 hours but we decided to shut down and fix it a little more,” he explained.
For the Palinpinon and Tongonan facilities, EDC expects to complete the rehab for the four remaining units also within the year.
Tantoco explained that the issue mainly with the Palinpinon-Tongonan complex was that the equipment was already old. More than increasing the capacity, the target for these facilities was to increase operational efficiencies so these would run again at their full capacities, he said.
When EDC acquired the Palinpinon and Tongonan geothermal plants in 2009, they were running at 180 MW and 84 MW, respectively.
EDC, through its wholly owned subsidiary, BacMan Geothermal Inc., submitted the highest bid of $28.25 million for the BacMan geothermal power plant package during the bidding in May 2010.
The BacMan I geothermal facility has two 55-MW turbines, both commissioned in 1993, while the BacMan II facility also has two 20-MW units: Cawayan located in Barangay (village) Basud and Botong in Osiao, Sorsogon City. The Cawayan unit started operating in 1994, while the Botong unit was commissioned in 1998. The Lopez affiliate currently provides the steam for these facilities.
The Palinpinon and Tongonan power plants were acquired by EDC in 2010 through its subsidiary Green Core Geothermal Inc., after submitting the highest bid of $220 million.

Sunday, January 29, 2012

Meralco set to spend more amid lower rates

Business Mirror

THE Manila Electric Co. (Meralco) is ready to invest more in the next three years amid the slightly lower distribution rates set by the Energy Regulatory Commission (ERC).

In a presentation, Ivanna de la Peña, Meralco first vice president, said the company was likely to invest P42.6 billion even in the face of a slightly lower distribution rate of P1.58 per kilowatt-hour (kWh) in the next three years, as set by the ERC. Meralco had spent P33.8 billion while its distribution rate averaged P1.6464/kWh from 2008 to 2011.

Meralco’s distribution rates for the next threae years will be based under the ERC’s performance-based regulation (PBR) rate-setting mechanism.

The ERC evaluated and determined Meralco’s forecast energy sales and demand, proposed performance standards, and annual revenue requirement and maximum average prices.

De la Peña said Meralco’s approved distribution rates in the next three years will go down from P1.5828/kWh in 2012, P1.5824/kWh in 2013, P1.5821/kWh in 2014 and P1.5817/kWh in 2015. The ERC said it disallowed certain projects in Meralco’s proposed capital expenditures for not being fully justified. This contributed to a significant drop in the figures for the return-
on-capital component of Meralco’s approved revenues, as compared to what it proposed in its application.

The ERC also adopted a more stringent performance-incentive scheme than that proposed by Meralco, ordering it to observe the approved performance indicators and giving it the appropriate incentives to improve its services.

Amid these rates, de la Peña said the increased spending is in light of the company’s forecast of steady growth in electricity demand that has to be commensurate through distribution-capacity investments. She said Meralco’s latest estimates showed that its customer base continued to grow at 3.3 percent to 5.01 million last year, from
4.85 million in 2010; energy sales grew by only 0.8 percent to 30,489 gigawatt-hours last year from 30,247 GWh in 2010.

In 2010, Meralco’s energy sales grew by 9.9 percent to 30,247 GWh from 27,516 GWh in 2009 as its customer base also grew by 3.1 percent to 4.85 million from 4.7 million in 2009. “Initially, we requested for a much higher distribution rates but were capped,” Oscar Reyes, Meralco senior executive vice president and chief operating officer, said.
Reyes said Meralco will have live within these approved rates and will just have to be more efficient and effective and must make ensure they give the best service.
Even with the lower distribution rates, Reyes said they have already defined major investment projects that include upgrades of distribution facilities, such as transformers, substations, poles, wires as well as reaching out to nearby and newer areas.

“We all recognize the difficulties of not having adequate and reliable power supply. Thus, our aim is to provide adequate, reliable, and quality power all throughout the year,” Reyes said.

Ayala power unit moves to hike capital

Business World Online
Posted on January 29, 2012 10:33:22 PM

THE POWER unit of Ayala Corp. has moved closer to getting regulators’ approval for a planned capital stock hike, with a Securities and Exchange Commission (SEC) division granting its endorsement.

THIS wind farm located in Bangui Bay, Ilocos Norte is co-owned by Ayala Corp. through a subsidiary’s 50% stake in Northwind Power Development Corp. -- AFP
AC Energy Holdings, Inc. obtained recommending approval from the SEC’s audit division on Jan. 25 after filing an application to hike capital stock to P4.5 billion from P10 million last month.

“In view of the foregoing, the increase in the authorized capital stock of the corporation may be given in due course insofar as the subscription of P2.178-billion worth of shares and full payment thereon in the form of advances/deposits for future subscription are concerned,” the document stated.

Its parent Ayala Corp. has subscribed and paid up P2.178 billion, documents further showed. Officials could not be immediately reached for additional comments.

SEC Registration and Monitoring Department Director Benito A. Cataran will have to grant final approval for the capital stock hike to be cleared.

The development comes as AC Energy Holdings, formerly Michigan Power, Inc., is readying investments into solar, wind, and mini-hydro power projects.

The Ayala group had said it plans to build a portfolio of power generation assets of more than 1,000 megawatts (MW) over the next five years.

Ayala had earlier said it may sell P10-billion worth of long-term preferred shares to raise funds for new investments.

Last year, AC Energy Holdings entered into a joint venture with Trans-Asia Oil and Energy Development Corp to build a 135-MW power plant in Calaca, Batangas. Construction stared in September last year.

Ayala had also acquired a 50% stake in the firm behind the 30-MW Bangui wind farm in Ilocos Norte and had forged a separate joint venture to develop hydro plants. -- Cliff Harvey C. Venzon

BacMan geothermal plant seen running by Sept.

Business World Online
Posted on January 29, 2012 10:18:46 PM

ENERGY DEVELOPMENT Corp. (EDC) expects to complete rehabilitation work on its Bacon-Manito (BacMan) geothermal power plant by September, more than a year later than planned, an official said last week.
“For BacMan, the base case assumption is that the plant would run in September this year. We were hoping to get it running by July last year but we started running one unit last December and there are really some issues you will find in the unit after it hasn’t run in five to seven years,” EDC President and Chief Operating Officer Richard B. Tantoco told reporters in an interview.

He added the company is optimistic it will be able to put the geothermal plant back on line soon.

EDC won the bid for the operations of the power plant for $28.5 million in 2010. The company provides steam to the BacMan plant.

Rehabilitation work began in May 2010 right after EDC won the contract. It was originally planned to finish in as early as 18 months.

BacMan is located in Bacon, Sorsogon and Manito, Albay. The 110-MW (megawatt) BacMan I geothermal plants was commissioned in 1993 while the 40-MW BacMan II plants were commissioned in 1998.

It had a capacity of 150 MW. However, due to the damage to one of the units last year, only 130 MW can be restored.

Since last year, BacMan has been shut down.

EDC is also shutting down one of its other geothermal complexes consisting of the 305-MW Tongonan I geothermal power plant and the 192-MW Palinpinon geothermal plant in Leyte.

The company will rehabilitate two units of Palinpinon and two units of Tongonan.

“Four units of Palinpinon-Tongonan will go down. That’s scheduled until the end of March and June. We’re doing fairly significant work on those so we can finish within the year,” Mr. Tantoco said.

“The issue with Palinpinon, however, is the equipment is very old so we’re tearing down the entire cooling system and putting in brand new ones” he said.

EDC’s subsidiary Green Core Geothermal, Inc. won the bid to operate the power plant in 2009 for $220 million.

EDC posted a loss of P487.7 million in the nine-month period ending September 2011 from an income of P7.6 billion in the same period the year previous, latest financial statements show.

Aside from the BacMan geothermal power plant and the Tongonan I and Palinpinon plants in the Visayas, the Lopez-led firm also operates the 132-MW Pantabangan-Masiway hydroelectric facility in Nueva Ecija.

It also holds contracts to develop wind projects in Northern Luzon.

Shares of EDC closed at P6.30 on Friday, up 1.61% from its previous close of P6.20 apiece. -- Emilia Narni J. David

Saturday, January 28, 2012

Co-ops seek 20-year freeze on rates if gov’t sells hydropower plants

By Bobby Lagsa
Inquirer Mindanao
2:25 pm | Saturday, January 28th, 2012

CAGAYAN DE ORO CITY, Philippines—The Association of Mindanao Rural Electric Cooperatives (Amreco) is asking the government to ensure that whoever buys two hydroelectric power plants that it reportedly plans to sell will not raise power rates for 20 years following the sale.
Sergio Dagooc, president of the 32-member Amreco, said it appeared that the government was serious about privatizing the Agus and Pulangui hydropower plants because a government official has said the proposal was inevitable.
Dagooc said the hydropower plants account for 55 percent of Mindanao’s power supply and were the main reason why power rates on the island were lower compared to those in Luzon or the Visayas.
Currently cooperatives buy electricity at about P6 per kilowatthour from the hydropower plants, which are operated by the government.
Amreco, in an earlier statement, said that even if the electricity generated by the hydroplants was sold to end-consumers at a much higher rate, Mindanao would still enjoy the lowest power rates in the country.
That was the reason why, Amreco said, it could not understand why the government wanted to sell the facilities.
Dagooc said the government reasoned out that the hydropower plants have been producing less energy during the past years and the government did not have enough resources to increase the plants’ generation capacities.
He said Amreco would like to see the government data on this.
“We would like to see if what they claimed was true. There should be transparency in power generation,” he said.
Mindanao Development Authority head Luwalhati Antonino said the government was only trying to ensure that power supply in Mindanao is stabilized by letting the private sector upgrade existing hydropower facilities or build new ones.
“The government’s feasibility studies showed that mini- and micro-power dams are viable options,” she said.

FGen Raising P10B For Expansion

Manila Bulletin
January 28, 2012, 3:53am

MANILA, Philippines — The expected proceeds of up to P10 billion from the series “G” preferred shares issuance of Lopez-owned First Gen will bankroll proposed future growth projects in the power sector.

The cash infusion will similarly address the company’s scheduled refinancing plan that will continuously underpin its “recapitalization efforts.”

The Lopez firm’s stockholders in a special meeting on Wednesday approved “the creation of 135 million series ‘G’ preferred shares with a par value of P10 per share.” The lower end of the expected proceeds from the shares issue had been placed at P5 billion.

The company emphasized via its disclosure to the Philippine Stock Exchange (PSE) though that “the issue value and dividend rate (are) to be determined by the board of directors at the time of issuance.”

In the same meeting, the stockholders also gave go-signal for the company’s bid to increase its authorized capital stock to P8.6 billion.

First Gen and its subsidiaries, primarily the Energy Development Corporation (EDC), have been continuously trailing investment growth paths, including forays overseas.

EDC, in particular, has gained initial milestones on its proposed offshore venture after securing concession for development of geothermal projects in Chile – which is just one leg of its planned investments in Latin America.

The Lopez companies are also aggressive on setting their sights on renewable energy (RE) projects, primarily wind and hydropower facilities.

Like all of the project sponsors though, the firm is also waiting for the final decision of the Energy Regulatory Commission (ERC) on the feed-in-tariff (FiT) charges to be levied across RE technologies.

COA hits SSS sale of Meralco shares

By: Leila B. Salaverria 
Philippine Daily Inquirer 3:30 am | Saturday, January 28th, 2012 
 The Commission on Audit (COA) is questioning the sale by the Social Security System (SSS) of its shares in the Manila Electric Co. (Meralco) for over P5 billion to a buyer with net assets of only P60 million.
The COA said the sale was contrary to the Social Security System Act and the guidelines for SSS funds, which state that it should invest funds with skill, care, prudence and diligence, and that investments should adhere to sound business practices and financial principles. 
The SSS, however, justified the sale and told the COA that the buyer’s parent company has a lot of assets. It also said the sale was a strategic move that allowed the SSS to sell high risk stocks at a gain. But COA said the SSS assumed more risks by selling the Meralco shares to the primary buyer. 
“It is somewhat ironic that, by choosing to sell the Meralco holdings of SSS to a newly created company that is under-capitalized and has no track record of profitability, management has caused SSS to assume a risk that is even greater than that of retaining its Meralco holdings,” COA said in its 2010 report on the SSS. 
The COA did not name the buyer in its audit report, although media reports said that SSS sold its Meralco shares to Global 5000 Investment Inc. in 2009. 
Global 5000 Investment is a holding firm formed in 2008. The company was then led by businessman Iñigo Zobel, former trade minister Roberto Ongpin and condiments king Joselito Campos—the key players behind Top Frontier Holdings Inc., which is now the dominant voting bloc in San Miguel Corp. In January 2009, the SSS executed a share purchase agreement (SPA) with Global 5000 Investment as the primary buyer and the Development Bank of the Philippines (DBP) as the secondary buyer for the sale of 62.99 million common shares. The shares were sold for P5.660 billion, or P90 per share. 
The SSS received P1.133 billion as down payment in February 2009 with the balance payable in three installments. 
The last installment is due on Jan. 31, 2012. But COA said Global 5000 Investment was only incorporated on Jan. 23, 2008 with a paid up capital of P62.5 million based on records from the Securities and Exchange Commission. The incorporation was just one year prior to the SPA, it noted. 
“It bears stressing that the P4.535 billion outstanding principal consideration was 72 times more than the P62.5 million paid-up capital,” it said. 
The buyer’s net asset was P60.210 million. The COA also found that DBP’s participation as secondary buyer was intended to cover the primary buyer’s lack of creditworthiness. But the SPA states that DBP’s obligation to pay the extended amount in case the primary buyer defaults is subject to prior approval of the DBP’s Board of Directors. It said there was nothing in the SPA to suggest that the DBP Board was obliged to give its approval. 
“Accordingly, the DBP’s role as secondary buyer does not fully secure SSS against the risk of primary buyer’s default to pay fully the outstanding principal consideration and fixed term interest thereon,” the COA said. 
It further said that considering the prevailing circumstances under which the Meralco holdings of the SSS were sold, it believes that a prudent man acting in the agency’s best interest would not have agreed to a primary buyer who was not creditworthy; would not have made a decision on the basis alone of a secondary buyer’s good credit rating; and would not have agreed to a condition restricting the secondary buyer’s obligation, which would negate the security against losses. 
The COA also said the SPA provision that allowed the buyer to get Meralco dividends and other benefits as well as voting rights upon paying the down payment was disadvantageous to the SSS. With a report from Dax Lucas

NGCP Rates Cut P46.87/Kw Monthly

Manila Bulletin
January 28, 2012, 12:13am

MANILA, Philippines — Starting this January billing cycle, the wheeling rate of the National Grid Corporation of the Philippines (NGCP) to load customers will be slashed by P46.87 per kilowatt per month (kW/month) to P317.63 from last year’s P364.51 per kW/month.

The rate translation to end-consumers to be billed as transmission charge then will also be lower. The rate cut will likely reflect in the bills this February.

The reduced tariff of the grid operator was due to the provisional ruling of the Energy Regulatory Commission (ERC) trimming down its maximum allowable revenue (MAR) to P40.350 billion for 2012 from the previously regulatory year’s P44.889 billion. It is also lower than the P47.775 billion applied for by the transmission firm.

“The computation of the PDS (power delivery service) rate is exclusive of the PIS (performance incentive scheme). Notably, the effective MAR for CY (calendar year) 2012 is reduced by P4.538 billion … the indicative equivalent charge is reduced by P46.87/kW/month,” the ERC ruling has stipulated.

The breakdown of NGCP’s allowable revenues for this year will be as follows: P29.843 billion for Luzon grid; P5.035 billion for Visayas; and P5.471 billion for Mindanao.

The ERC noted that these shall be based on calculated billing determinant which has been placed at 123,811 megawatts per month.

The regulator acknowledged that there has been discrepancy in the computation of NGCP to that of the ERC because of the use of differing reference MAR for 2011. The applicant-firm factored in a MAR of P45.369 billion; while the regulator set it lower at P42.365 billion.

Similarly, the regulatory body has allowed NGCP to start billing this January its PIS reward claims of P503 million. This is related to the grid operator’s performance level – entailing that it surpassed guaranteed service levels, hence, it will be entitled to reward claims instead of penalties under the PIS scheme.

“Notwithstanding the consideration of the PIS reward, the net impact on the rates still results to a reduction,” the ERC has emphasized.

Under the performance-based ratesetting (PBR) methodology, a regulated entity like the NGCP, is mandated to file for a five-year rolling revenue requirement, which will then be translated to per kilowatt hour (kWh) charge to consumers.

Anchored on that five year profitability projections, regulated utilities will still need to file annually for updated tariff translations; and such will include adjustments for over- and/or under-recoveries on their rates pass-on. (MMV)

NEA sets aside P6.7B for rural program

Manila Times.net
Published : Saturday, January 28, 2012 00:00 Written by : EUAN PAULO C. AÑONUEVO

State-run National Electrification Administration (NEA) has allocated bulk of the agency’s budget for the year for rural electrification projects across the country.

Based on the government approved annual budget for the agency, NEA will utilize P6.77 billion for rural electrification out of a total P8.65 billion in allocated funds.

NEA, which is tasked to oversee the operations of electric cooperatives, will use P3.70 billion out of the agency’s own coffers and P500 million from borrowings for capital outlay of countryside electrification projects.

The government, on the other hand, will contribute P2.57 billion to NEA’s rural electrification budget.

The said amount, in particular, will go to sitio electrification and barangay line enhancement projects.

NEA earlier reported that there are 833 sitios scheduled to be energized this year.

There are also 202 barangays that were previously electrified through solar home systems that will be connected to the main grid through a line enhancement program.

Energy Secretary Jose Rene Almendras, however, earlier said that the government is ready to double its rural electrification budget in its bid to improve the country’s overall electrification threshold.

“We have allotted P2.5 Billion this year and if needed, we will be providing an additional P2.5 Billion for a total of P5 Billion to be poured to rural electrification. Our goal is all about energy access for more,” he said.

The country’s household electrification level is placed at only 70 percent with majority of those without electricity located in Mindanao and the Visayas. The government targets to increase this further to over 90 percent by 2017.

Friday, January 27, 2012

MinDA wants probe on power shortage

By Loui S. Maliza
Friday, January 27, 2012

MINDANAO Development Authority (MinDA) chairperson Lualhati Antonino lashed out Friday at the National Grid Corporation of the Philippines (NGCP) on its claims that Mindanao faces shortage of power supply due to deteriorating hydro plants in the region.

Antonino said she doesn’t believe NGCP’s claim and would ask the House of Representatives to investigate.

“Ako’y hindi naniniwala na lumiit ang supply at ‘yan ang dapat sagutin ng NGCP,” she said in an ambush interview after a forum conducted by the Association of Mindanao Rural Electric Cooperatives (Amreco) at a restaurant in Cagayan de Oro.

Hydro plants are the main sources of power purchased by electric cooperatives (ECs) and distribution utilities (DUs) to provide electricity in the countryside.

“We should urge the congressmen for an investigation why is it happening that electric cooperatives now are forced to buy at much higher price on the pretext na maliit na ‘yong supply ng hydro,” she added.

Earlier, reports said the Department of Energy would be compelled to ask the electric cooperatives to buy more expensive power supply from other sources as hydro plants in Mindanao – the Pulangi and Agus - are on maintenance.

“The forum highlights the concern of electric cooperatives na mahal na ang bili nila sa power at napipilitan silang bumili ng supply from the private producers, dahil ang hydro plants natin ay hindi na daw makaka-supply sa kanila,” Antonino said.

Antonino admitted, however, that Mindanao could not solely depend on hydro because of the increasing demand. But she said NGCP should tell the truth about the “power supply and sources that the agency is not using.”

In a separate interview, Amreco president Sergio Dagooc said the association is ready to back up Antonino’s move by providing legal documents as evidence that NGCP is wrong about its announcements.

Since early January, NGCP has been announcing possible power curtailments in Mindanao in the next few days as a result of supply shortfall by 100 megawatts in the grid due to increasing demand and shortage of power supply.

Officials of NGCP have yet to issue their comment on the issue.

Published in the Sun.Star Cagayan de Oro newspaper on January 28, 2012.

Govt okays grid operator’s allowable revenue for 2012

Manila Standard Today
by Alena Mae S. Flores

The Energy Regulatory Commission approved a maximum allowable revenues of P40.35 billion to transmission operator National Grid Corporation of the Philippines for 2012, lower than the P44.89 billion approved for 2011.

The ERC also approved a performance incentive scheme reward to National Grid amounting to P503 million to be implemented effective its January 2011 billing cycle.

“The PIS rewards or penalizes NGCP to the extent that the actual level of performance for the grid for the regulatory year exceeds or falls below the target level of performance,” the ERC said.

ERC assured that despite the PIS reward, the net impact on the rates of National Grid’s maximum allowable revenue still results in a reduction in rates.

(Published in the Manila Standard Today newspaper on January 27, 2012.)

Thursday, January 26, 2012

Power discounts for ecozone firms extended

Business World Online
Posted on January 26, 2012 11:28:28 PM

DISCOUNTED ELECTRICITY rates for economic zone locators have been extended upon approval by Malacañang, the head of the Philippine Economic Zone Authority (PEZA) said on Thursday.
Linemen of the Manila Electric Co. check electricity meters in this undated file photo. Discounted power rates are meant to give economic zone investors a breather amid high costs of other production inputs. -- AFP
“Discounted power rates were extended. The extension is for one year or until open access is implemented. It was approved by the President,” PEZA Director General Lilia B. de Lima in an interview at the sidelines of the1st JFC (Joint Foreign Chambers in the Philippines) Investor Conference at the Manila Marriott Hotel in Pasay City
Malacañang officials, however, were not responding to calls to confirm the development.
Discounted electricity rates for economic zone investors are the subject of an agreement between the Power Sector Assets and Liabilities Management Corp. (PSALM) and distribution utility Manila Electric Co. (Meralco).
The agreement was to expire on Dec. 25 last year, but was extended for a month until Jan. 25.
Under the previous agreement, such investors paid a generation rate of P3.46 per kilowatt-hour (kWh) to P3.52/kWh, depending on consumption.
In comparison, Meralco’s industrial consumers pay a generation rate of about P5.347/kWh.
The discount has been estimated to translate to a total of P1.78 billion in yearly savings for all locators.
Ms. de Lima earlier said the government was able to negotiate a P0.25/kWh discount in power rates compared to previous discount of more than P1/kWh.
PEZA and the Department of Trade and Industry earlier proposed that power rates for economic zone locators be subsidized by the government as part of an incentive package.
Sought for comment, Budget Secretary Florencio B. Abad said in a text message on Thursday, “I remember endorsing [the proposals] to the Office of the President.”
Details of the final discount scheme, however, were not immediately available.
The discounted rates will be available to ecozone locators until the start of an open access regime.
Locators have three months from start of open access implementation to integrate into the new system.
Open access -- a regime where, initially, consumers using at least 1 megawatts can choose their source of electricity among accredited utilities -- was supposed to be declared on Dec. 26 last year, but was deferred to allow distributors more time to adjust their systems.
The government now targets to implement it in August. “Open access will be implemented in August and we will do the needed policies before that,” Energy Secretary Jose Rene D. Almendras said at the sidelines of the same investor forum. “We need to make the Wholesale Electricity Spot Market independent before open access can be implemented so we have to do that slightly before August.”
He added that the feed-in tariff for renewable energy -- which guarantees set rates that are higher than prices of electricity from conventional fossil fuel sources in order to attract investors -- will also be implemented this year after a delay of more than two years.
The scheme has been opposed by consumer rights grous and even some investment promotion officials, who have cautioned that -- amid the lack of adequate generation capacity -- it could drive up already-high electricity prices at a time the country is trying to lure foreign investments.
“We are very close to a win-win solution,” Mr. Almendras claimed. -- E. N. J. David

Interest in coal still ripe despite SMI ECC denial

Business World Online
Posted on January 26, 2012 11:26:53 PM

THE RECENTLY launched coal exploration bidding round continues to attract investors despite the denial of Sagittarius Mines, Inc.’s (SMI) environmental compliance certificate (ECC) due to issues relating to open-pit mining, an official from the Energy department said.
The department said investors have not yet indicated any intention to pull out of the bidding.
“So far, we do not see the denial of the environmental compliance certificate as dissuading interested parties in bidding at the [contracting round] for coal,” said Energy Undersecretary Jose M. Layug, Jr. in a text message to BusinessWorld.
He added investors have not indicated any changing interest in the coal contracting round.
The Energy department is offering 30 potential areas for coal resource exploration. Many of the areas are located in Mindanao.
It was launched in December last year.
The Environment department denied SMI’s application for an environmental compliance certificate on Jan. 13 because the issue of a South Cotabato open-pit mining ban is yet to be resolved.
The ban was approved in June 2010.
Sagittarius’ $5.9-billion Tampakan copper-gold project is described as one of the largest underdeveloped sites in Southeast Asia.
An environmental compliance certificate certifies that the project under consideration will not lead to unacceptable environmental impacts.
It is one of the requirements needed to secure a permit to operate a mine.
South Cotabato and Zamboanga del Norte have enacted open-pit mining bans.
The Energy department is offering two areas in South Cotabato and one in Zamboanga del Norte.
Mr. Layug said the Energy department is working with all the parties involved to ensure there will be no issues that will arise for investors.
“We will coordinate with [the Environment department] on policy issues relating to coal mining,” said Mr. Layug.
Companies interested in the coal contracting round have until Jan. 31 to submit pre-qualification documents.
The areas being offered are: Panukulan, Burdeos and Polilio in Quezon; Calauag, Tagkawayan, and Guinayangan in Quezon; Del Gallego, Camarines Norte; Rapu-Rapu Island, Albay; Bacon, Prieto Diaz and Gubatcon, Sorsogon; Cataingan, Masbate; Calintaan, Rizal, San Jose and Magsaysay, Occidental Mindoro; Bulalacao, Oriental Mindoro; Calatrava, Negros Occidental; Toledo, Minglanilla and Cebu City, Cebu; Inabanga, Clarin and Sinagbayan, Bohol; Kitcharao, Agusan del Norte; Magsaysay, Misamis Oriental and Carmen, Agusan del Norte; Sibagat, Agusan del Sur; Butuan, Agusan del Norte; Bayugan, Agusan del Sur; Bislig and Lingig, Surigao del Sur; Trento, Agusan del Sur; Nabunturan, Compostela Valley; Terragona, Davao Oriental; Togoloan II and Kapai, Lanao del Sur; Iligan City, Lanao del Norte; Lake Sebu, South Cotabato, Palimbing, Sultan Kudarat and Maitum, Sarangani; Kiamba, Sarangani; Godod, Zamboanga del Norte; Kabasalan, Zamboanga Sibugay; Ipil and Naga, Zamboanga Sibugay; Diplahan, Zamboanga Sibugay; Buug and Malangas, Zamboanga Sibugay; and Imelda and Alicia, Zamboanga Sibugay. -- Emilia Narni J. David

Philippine Energy Plan Preview Bared

Manila Bulletin
January 26, 2012, 11:06pm

MANILA, Philippines — An average annual economic expansion of 1.5-percent and population growth of 1.8-percent will be the guiding parameters being factored in by the Department of Energy (DoE) in its crafting of the Philippine Energy Plan.

Energy Secretary Rene D. Almendras noted this will be the econometrics to be employed in the country’s energy planning in the short term or until 2016. No specific elasticity ratio has been provided yet by the department, although it indicated that they are not expecting drastic growth in energy demand given current developments in the economy.

“The country’s energy demand is projected to increase by an average annual rate of 3.5-percent for 2011-2016, and by 2.7-percent from 2011 to 2030,” the energy chief stressed. The department used 2010 figures as reference for the updating of the PEP.

Under the Electric Power Industry Reform Act (EPIRA), the energy department is mandated to submit the updated PEP and Power Development Plan (PDP) to the Joint Congressional Power Commission every 15th of September annually.

The last time that consultation with stakeholders on the PEP crafting was in 2009; and no such plan has been circulated in the industry in the past three years already – aside from the per-segment supply-demand outlook occasionally being presented to stakeholders in investment forums.

Almendras though is giving his word to the industry that they will work on the energy sector plan to comply with the law and to apprise stakeholders of the needed investments as well as on the various industries’ growth projections.

He emphasized that the department is “in the process of updating the energy demand projections for the planning horizon covering 2011 to 2030 based on economic parameters,” citing the initially-released macroeconomic growth forecasts of the National Economic Development Authority; as well as the population climb foreseen by the National Statistics Office.

To keep up with the longer planning paradigm of other energy markets, the energy chief noted that his department “has yet to undertake demand forecasting until 2050 timeframe.”

In the next five years, the energy department sees a substantial incline in the energy demand of the transport sector; while “output-producing sectors such as industry, commercial and agriculture will exhibit increased shares to total energy demand.”

The residential sector, on one hand, is seen registering “a reduction in its contribution to total demand over the planning period”; while the reverse will happen in the industrial sector. (MMV)

Meralco set to launch prepaid service

business mirror


BARRING hitches, the Manila Electric Company (Meralco) will launch before the end of the year its prepaid service.
Alfred Panlilio, Meralco senior vice president for customer retail service, said a pilot test would start as soon as the Meralco board gives its go-signal.
“We want to begin the pilot test soon so we can get insights on how consumers adapt to prepaid electricity service and how we can package it,” Panlilio said during a roundtable discussion with the BusinessMirror and its sister media companies, the Philippines Graphic and radio station dwIZ.
The Meralco prepaid- electricity scheme works like the mobile-phone loading system.  A consumer provides a sari-sari store or any prepaid outlet his subscriber information number and the amount is loaded to that number via text message.
The results of the pilot test will help Meralco deliver a good prepaid-electricity service to consumers, Panlilio said.
“If we start [the pilot test] in March or April, it will be completed in four months and, hopefully, we could officially launch [the program] by the last quarter.” he said.
Earlier, he said most of customers showed their preference for prepaid electricity, saying the managed appliance use matched their household expense with their income.
A recent consumer research done by Meralco and General Electric showed that the prepaid system, which is like buying tingi, is ingrained in the Filipino lifestyle.
“Many wage earners receive daily or weekly pay, so they prefer their expenses—from mobile phones to Internet and electricity —to be also on a tingi basis,” Panlilio said.
The prepaid program would enable customers to budget their cash outflows. With the scheme, electricity becomes more affordable for many.
The study also noted that consumers were interested in the prepaid system because it serves as a budget tool that teaches household members to save and share expenses.
If households can manage their electricity consumption through the prepaid-electricity scheme, it could mean a lot of savings that could be used for other necessities, the study said. The results of the study will guide Meralco in designing the service it plans to pilot wit in the year and implement on a wider scale in 2012. “This prepaid innovation is meant to give our customers power of choice. That is why we wanted them to be involved from the beginning of this undertaking,” he said.

IN PHOTO -- MERALCO COO Oscar Reyes fields questions from editors, commentators and reporters of the BUSINESSMIRROR, Philippines Graphic and dwIZ during a roundtable forum at the BusinessMirror conference room in Makati City. With him is Ivana de la Peña, Meralco first vice president and head of the regulatory management office. --NONIE REYES

Wednesday, January 25, 2012

Davao Light’s power deals shield Davao of brownouts

Business Mirror

DAVAO CITY—The Davao Light and Power Co. said that its embedded power agreements with two mini-hydro generation plants here and in Davao del Sur helped this country’s third-largest power distributor to offset the load curtailment imposed by the National Grid Corp. of the
Philippines (NGCP) over dwindling power supply.
This meant minimizing the number of brownouts suffered by residents and businesses in the city.

In a statement over the weekend, Davao Light said its embedded power agreements with Hedcor-Sibulan and Hedcor-Talomo, two sister companies in the Aboitiz group of companies, has shielded Davao consumers of expected brownouts that were already being implemented by the other electric distributors and cooperatives in Mindanao.

To bolster its steady power reserve, Davao Light has also began tapping the Therma Marine Inc., the 100-megawatt power barge stationed offshore of Maco town, Compostela Valley. It also placed in “hot standby basis” its diesel-fired plant along Bajada, two kilometers north of downtown.

On Jan. 20, Ross Luga, assistant vice president for communication of Davao Light, said the NGCP issued an advisory that it would “implement a load curtailment of up to 150 MW in the grid in view of the generation deficiency.” He said that Davao Light’s share of the total curtailment is approximately
30 MW.

Luga said that the NGCP had been earlier issuing advisories to the power utilities in the Mindanao grid since the first week of January about the generation deficiency situation in the island.

“However, even with its share in the curtailment, Davao Light customers have not been experiencing rotating brownouts unlike electricity end-users in other parts of Mindanao. This is because Davao Light has contracted power supply agreements [PSA] in anticipation of such curtailment given the projected precarious level of supply and reserve in the grid,” he said.

Luga said the Hedcor-Sibulan and Hedcor-Talomo produce at peak capacities 42.5 MW and 4.5 MW, respectively. Hedcor-Sibulan was commissioned in 2010 and Hedcor-Talomo has been operating for more than 18 years.

“Acting as embedded facilities, these hydro plants feed directly in the distribution network of Davao Light ensuring their availability to supply even in the event the NGCP transmission system is down,” he said.

Davao Light began tapping its TMI agreement of 15 MW contracted on Jan. 17 and has placed on “hot standby basis” the 58-MW rated capacity of the Bunker C-fired fuel power plant in Bajada. The Bajada plant could produce an average of 40 MW on a sustained basis on 24 hours of operation.

Davao Light has 214,636 consumers in the city, and its expansion areas that cover neighboring Panabo City, Carmen and Sto. Tomas towns in Davao del Norte. About 85 percent of its consumers are residential, 1.7 percent are industrial users, and 13.43 percent are commercial users.

Tuesday, January 24, 2012

First Pacific cements control of Meralco

By: Doris C. Dumlao
Philippine Daily Inquirer
3:20 pm | Tuesday, January 24th, 2012

MANILA, Philippines—The First Pacific group cemented its majority control of power distributor Manila Electric Co. by acquiring an additional 2.66 percent stake in the company from the Lopez group for P8.85 billion.
Local holding firm Beacon Asset Holdings struck a deal to buy 30 million additional common shares in Meralco at a cash price of P295 per share, or close to record high prices, thus raising its stake in the utility to 48.02 percent. The transaction is expected to be completed on February 1.
Beacon is a 50-50 percent joint venture between First Pacific-led units Metro Pacific Investments Corp. and PLDT Communications and Energy Ventures Inc. (PCEV), formerly known as Pilipino Telephone Corp. PCEV owns another 6.1 percent direct stake in Meralco aside from the indirect interest through Beacon, giving the First Pacific group led by businessman Manuel V. Pangilinan majority control of the power distributor.
The two companies told the Philippine Stock Exchange that this acquisition represented “an opportunity to further consolidate Beacon’s investment in a sector that the Beacon group believes will have significant growth as the Philippine economy grows.”
“Meralco is now focused on growing its current business and in investing in new areas such as power generation, aimed at enhancing shareholder value and providing efficient and upgraded services for the public,” the joint disclosure said.
Beacon’s funding for this acquisition, like other recent purchases of shares in Meralco, will be provided via an equity injection of P5.4 billion to which MPIC and PCEV will subscribe equally and a P5 billion corporate notes facility arranged for Beacon by First Metro Investment Corp. and PNB Capital and Investment Corp.
After the completion of the transaction, the Lopez group, through First Philippine Holdings together with subsidiary First Philippines Utilities Corp., will continue to own about 3.9 percent of Meralco. The Lopezes, under certain conditions, will also retain a board seat in Meralco under certain circumstances after completion of the sale.