Wednesday, December 6, 2017

Alsons to sell 50% stake in coal power plant to GBPC

By Danessa Rivera (The Philippine Star) | Updated December 6, 2017 - 12:00am

MANILA, Philippines — Alcantara owned Alsons Consolidated Resources Inc. (ACR) will raise P2.4 billion from the sale of 50 percent of its subsidiary holding its baseload coal-fired power plant assets to Pangilinan-led Global Business Power Corp. (GBPC).

ACR disclosed yesterday it will sell 14.95 million shares in Alsons Thermal Energy Corp. (ATEC), which is equivalent to 50 percent, to GBPC at a price of P159.03 per share, or roughly P2.37 billion.

“Following the sale, transfer and delivery of the ATEC shares to GBPC, the issuer’s parent company financial statements will reflect a temporary decrease under investment in subsidiary while the cash item will increase substantially,” ACR said.

“The liquidity arising from the sale of a portion of its equity interest in ATEC and the underlying assets will allow ACR to invest in other projects and/or possibly reduce a portion of its debt,” the company added.

The total purchase price will be paid by GBPC to ACR on closing of the deal and a retention of P100 million will be paid after getting the Bureau of Internal Revenue (BIR) certificate authorizing registration.

The closing of the deal requires the approval of the Philippine Competition Commission, which was secured in September.

Other requirements include obtaining the consents, approvals or other actions by certain third parties and the consent of certain customers.

ACR should also provide GBPC with certain documents pertaining to the advances to be assigned to the latter.

Last June, ACR and GBPC forged an agreement where the former will acquire a 50 percent interest in ATEC for P4.25 billion.

The deal will allow ACR to speed up its expansion into the renewable energy sector and into other parts of the country, ACR chairman and president Tomas Alcantara said.

ATEC currently holds a 75 percent stake in the 210-megawatt (MW) Sarangani Energy Corp. (SEC) baseload coal-fired plant in Maasim, Sarangani province while Japanese partner Toyota Tsusho Corp. (TTC) holds 25 percent.

The SEC plant’s first 105 MW section began operating in April 2016. SEC’s second 105 MW section is currently undergoing construction and is scheduled for commissioning in the fourth quarter of 2018. When SEC reaches its full 210 MW capacity in the first half of 2019, it will be servicing over six million people in key population centers of Mindanao such as General Santos, Cagayan de Oro, Iligan, and Butuan. At a cost of nearly $600 million, the SEC power plant is the largest power investment in Sarangani province and the entire Region 12.

GBPC, Vivant firm up deal to put up coal power plant

By Danessa Rivera (The Philippine Star) | Updated December 6, 2017 - 12:00am

MANILA, Philippines — Cebu-based Vivant Corp. and Global Business Power Corp. (GBPC) have firmed up their partnership to put up a 670-megawatt (MW) coal-fired power plant in La Union, solidifying their entry into Luzon.

In a disclosure to the Philippine Stock Exchange, Vivant said its unit Vivant Integrated Generation Corp. (VIGC) has signed a pre-development agreement (PDA) with GBPC to build a 2x335-MW coal-fired power plant in Luna, La Union.

The two firms will jointly participate through Lunar Powercore Inc. in a project under special purpose vehicle Global Luzon Energy Development Corp. (GLEDC).

GLEDC will undertake the financing, design, procurement, construction, testing, commission, operation and maintenance of the coal-fired power plant.

VIGC and GBPC have set aside P450 million to jumpstart the project, which is scheduled to start commercial operations in 2022.

GLEDC has secured local government endorsements and land conversion certificates while The project company is awaiting the Energy Regulatory Commission’s approval for its power supply agreement (PSA) of up to 600 MW with Manila Electric Co. (Meralco) signed in 2016.

It is also waiting for the issuance of an environmental compliance certificate from the Department of Environment and Natural Resources, which is required to hear the merits of the PSA.

Vivant said it is pouring in P67 billion for new power generation projects in three years starting 2015 as part of the company’s strategy of continuously expanding in the power industry.

Also a major power player in Visayas, GBPC announced plans to expand in Luzon and Mindanao by investing in traditional power projects and venturing into the renewables sector to meet its goal of doubling its capacity in five years.

GBPC is now led by businessman Manuel Pangilinan after Metro Pacific Investment Corp. (MPIC) – which he chairs – acquired a 56 percent stake in the company in May 2016 for P22.06 billion following a strategic alliance with tycoon George Ty’s GT Capital Holdings Inc.

GT Capital then entered as a strategic investor in MPIC, acquiring a 15.6 percent stake for P21.96 billion.

Preempting a looming power crisis

 By Greg B. Macabenta
It is said that if hindsight is a perfect science, that makes scientists of our country’s national leaders and bureaucrats. In administration after administration, the would’ve-could’ve-should’ve syndrome has been a familiar affliction. Everyone — particularly those in the legislature and in MalacaƱang — have been experts on how a crisis would have, could have and should have been avoided if “someone” had acted promptly and efficiently.
Sadly, these buck-passers won’t admit that they could have and should have anticipated and acted on the crisis — but didn’t.
Well. Another crisis is looming. And this time it can be and should be avoided. It’s also an opportunity for this government to show that it knows how to manage national affairs, beyond liquidating drug suspects and conducting fruitless legislative investigations.
CNN Philippines has just run a five-part series on the threatening power crisis, entitled, “Powering the Future.” This time, it is a prospective rather than a retrospective situation confronting the government’s energy czars, as well as the legislature and President Rodrigo Duterte. A situation they can and should promptly act on.
Much has already been said about past power problems that plagued the country, going back to the administrations of presidents Corazon C. Aquino and Fidel V. Ramos. Our leaders should already have learned the bitter lessons from the insufferable brownouts, the corrosive effect on the national treasury, and the negative impact on the country’s investment prospects and infrastructure programs — lessons that ought to prompt them to act expeditiously and efficiently this time around.
The CNN reports are persuasive:
1. The country’s current dependable power reserve is very low at five to 10% compared to other Asian countries, like Singapore with reserves at 50%.
2. During summer, power outages become unavoidable as supply grapples with the seasonal spike in electricity usage. Offices and households need more cooling appliances, and establishments have to cope with increased tourism activities. These, on top of regular household and business power consumption.
3. The Philippines’ power demand has been increasing at a rate of five to eight percent annually, one positive reason being the country’s strong economic growth.
4. The country’s ambitious 2017 to 2022 infrastructure plans and the growth of the power-intensive manufacturing sector will further add pressure on supply.
5. What makes the chronic power supply problem worse is the near depletion of the Malampaya Natural Gas Facility which provides 30% of Luzon’s total capacity of 11,218 megawatts (MW). The facility’s gas reserves are expected to run out starting in 2024, posing a serious power supply shortfall.
6. Note that a power deficit of 100 MW can result in a one-hour daily rotational brownout.
So, how can these obvious problems be addressed and the looming crisis averted? Again, the CNN report proposes solutions that any reasonably intelligent and diligent bureaucrat would, could and should understand:
1. Build more power plants as soon as possible. This would, could and should ensure the steady supply of electricity needed to meet the growing energy demand.
2. Get rid of the disincentives for private sector investments in power plants, mainly, the red tape that unbelievably requires five years. COUNT THEM, FIVE YEARS to process an application for a permit to build a power plant. A power plant investor also needs to secure 162 clearances and 102 permits before any work can start on a facility. COUNT THEM: 162 CLEARANCES AND 102 PERMITS.
Mercifully, Senator Sherwin Gatchalian, who has had hands-on commercial and industrial management involvement and expertise, has filed a bill to nip the bureaucratic red tape in securing power plant permits. He proposes the Energy Virtual One-Stop Shop (E-VOSS), a Web site for all power plants in the country, that will allow a prospective investor to submit documents electronically, monitor the status and pay fees online.
The bill will also impose a 30-day deadline to approve a specific permit. The entire process will be shortened to one-and-a-half years, at the most. That’s still a long time in view of the looming crisis but infinitely faster than five years.
Another promising development is the technology-neutral policy that has been adopted by the Department of Energy. This policy promotes various energy sources such as solar, geothermal, wind and hydro, and also includes coal and oil. The objective is to make power supply cost-efficient and reliable.
This is good news for current and potential coal power plant investors. Coal-fired power plants generate a third of the country’s dependable power supply and coal happens to be the most abundant, most reliable and least-cost fuel in the country.
Concerns have been raised about coal, in view of the climate change crisis, but proponents say that the problem can be minimized, with strict observance of the conditions in the Environment Compliance Certificate (ECC), which covers pollution, waste water and tree cutting. The emergence of the so-called clean coal technology could also reduce carbon emissions.
Renewable and environmentally ideal energy sources, like solar and wind, while expensive and difficult to set up, offer the prospects of a more sustainable energy program in the long run. These should not be overlooked.
Anticipating the country’s power needs and promptly acting on them should be given high priority by the government. While hindsight is a perfect science, foresight is better proof of government efficiency and commitment to public service.

Gas policy sets stage for LNG terminal bids

December 6, 2017

THE Department of Energy (DoE) on Tuesday outlined its policy for the downstream natural gas industry, a strategy for making the Philippines a regional hub for the fossil fuel, which includes plans for a $2-billion liquefied natural gas (LNG) terminal.
“That would guide everybody including PNOC (Philippine National Oil Co.)… to operate an LNG  terminal,” DoE Secretary Alfonso G. Cusi told reporters at the ceremonial signing of Department Circular 2017-11-0012 or the “Rules and Regulations Governing the Philippine Downstream Natural Gas Industry.”
He said the circular is needed ahead of the construction next year of the integrated LNG facility. Many companies that are keen on participating in the project have been awaiting the issuance of the rules before firming up their plans.
“It takes two and a half years to make it [LNG terminal] operational from the time the project starts,” he said.
He said the project should be completed before the expected depletion of the Malampaya offshore gas find near Palawan island in 2024.
“But we will not wait for that. We need that in place in three years’ time,” he said.
He said local and foreign project proponents have approached PNOC to partner with the DoE’s commercial arm in the project.
Separately, DoE Undersecretary Donato D. Marcos said under the rules, PNOC or its unit PNOC Exploration Corp. (PNOC-EC) may acquire at least a 10% stake in the LNG project, which will house a storage, regasification and a power plant.
He placed the facility’s cost at around $2 billion and its eventual capacity at five million metric ton per annum.
“We’ve finished. We have complied with all the policy regulations, it’s up to them (PNOC) to find a partner,” Mr. Cusi said.
But he said foreign entities that submit proposals directly to the DoE will still be referred to PNOC or PNOC-EC for a possible partnership.
“They are choosing a partner to move their project forward. So that is complying with the policy that we have crafted,” he said, adding that three proposals from foreign groups are being evaluated by PNOC.
Mr. Marcos said the LNG terminal’s power plant component can be 100% owned by foreigners, although the public utility component is subject to the constitutional limitation of 40% foreign ownership.
“That’s why the permit is for the third-party access,” Mr. Marcos said.
Under the rules, excess capacity of the LNG terminal, transmission system, distribution system and other services offered by the operator should be made available on a transparent and non-discriminatory basis to third-party users. — Victor V. Saulon

Ocean tidal power JV flags need for state guarantees

December 6, 2017

H&WB ASIA PACIFIC (Pte Ltd) Corp., a Filipino-French joint venture (JV) building an ocean tidal power facility, has backed the creation of a single state-led guarantee agency.
“Ocean power needs strong government support. The kinetic energy of tidal currents produces stable electricity supply. This is real ‘grid smart’ technology because it can provide steady ancillary service supporting the transmission of electricity from generation to customers up to far-flung areas,” said Antonio A. Ver, president of H&WB Asia Pacific (Pte Ltd) Corp. in a statement.
H&WB and French marine energy technologies and engineering company Sabella SAS are jointly building a $25-million pilot phase of an ocean tidal power plant in San Bernardino Strait.
The project, under special purpose company San Bernardino Ocean Power Corp. (SBOPC), aims to boost the country’s renewable energy portfolio.
Mr. Ver said the government’s plan to put up a single government guarantee system, which was endorsed in October by the Governance Commission for Government-Owned or -Controlled Corporations for President Rodrigo R. Duterte’s approval, will bolster the chances of SBOPC getting the international funding.
H&WB said the project was shortlisted in May 2017 for possible financing under the fifth funding cycle of the International Renewable Energy Agency/Abu Dhabi Fund for Development (IRENA/ADFD).
ADFD requires a government guarantee letter and a guarantee agreement for loan applicants that are private entities such as SBOPC.
“The ADFD loan facility is an effective financing strategy for the San Bernardino ocean power plant and securing the funding will certainly accelerate the construction and development phases of the project and jumpstart the development of ocean energy,” he said. — Victor V. Saulon