First Gen wants stake in Pagbilao plant

Manila Standard Today
Posted May 2nd, 2012 by Alena Mae S. Flores 


First Gen Corp. has revived its interest for a minority stake in the 400-megawatt expansion of the Pagbilao coal-fired power project.

First Gen president Francis Giles Puno told reporters at the sidelines of the company’s analyst briefing for its preferred shares issuance that the company had a previous agreement with TeaM Energy Corp. for the Pagbilao plant expansion.

First Gen was supposed to be the original partner of the TeaM Energy, the joint venture of Japanese firm Tokyo Electric Power Corp. and Marubeni Corp. for the purchase of Mirant Philippines’ assets several years ago.

The company, however, abandoned its plan, saying it was focusing on greenfield projects and other acquisition opportunities.

“When we are part of TeaM Energy, part of our agreement, was that although at that time we could not bid with them, at that time, we did not have the capability, they agreed to give us rights if they decide to expand,” Puno said.

“At that time, it [Pagbilao] was all potential growth and it’s since been announced and with the announcement, it triggers certain rights for us to be able to buy into the Pagbilao expansion,” he said.

Puno said First Gen was now considering its right to the Pagbilao expansion and was in talks with TeaM Energy because of “the need for new capacity.”  source

TeaM Energy is set to award the project to an engineering, procurement and construction contractor this year and expects to begin operations by December 2015.

Puno said the company’s rights originally covered 30 percent, but because TeaM Energy has agreed to pursue the expansion with Aboitiz Power Corp., First Gen could now only take 30 percent of TeaM Energy’s 50-percent stake in the project or equivalent to about 15 percent.

Aboitiz Power administers the contracted capacity of the existing 735-MW Pagbilao coal project,

“We have the right to 1/3 so it’s 30 percent but in the case of TeaM Energy, they’re looking at a 50-50 [partnership with Aboitiz] so it will be 30 percent of the TeaM,” he said.

Puno said the company was pursuing the project even if it does not fall under renewable portfolio. First Gen has no coal project to date and has focused itself on geothermal, wind and hydropower development.

“It’s a little bit of going against our religion but at the same time, we realize that the market is less interested with the cleaner RE side than cheaper. In other countries, you have carbon equalization so coal will be equalized with gas, so gas becomes more cost competitive, but here it’s not yet happening. In the future, that will happen,” he said.

Puno, meanwhile, said the company would use the P10-billion proceeds from its preferred shares issuance to acquire British Gas’ 40-percent stake in the Sta. Rita and San Lorenzo natural gas-fired power projects with a combined capacity of 1,500 MW.

(Published in the Manila Standard Today newspaper on /2012/May/02)