Kepco buys BG’s gas stake

Manila Standard Today

Korea Electric Power Corp., South Korea’s biggest electricity producer, agreed to buy the 40-percent stake of BG Group Plc in two gas-fired power plants in Batangas province for $400 million.

Korea Electric beat other global companies for the stake, the Seoul-based utility said in an e-mailed statement Wednesday. The stake purchase in an overseas power plant is a first for a South Korean company, Korea Electric said.

The state-run utility and its units are venturing overseas, including the Middle East and Southeast Asia, to diversify revenue sources and counter slower growth in domestic sales. BG Group Plc, the UK’s third-largest oil and gas company, has been selling its power-generating assets this year to focus on projects in Brazil, Australia and the US.

BG agreed in July to sell its interest in Premier Power Ltd. to AES Corp. and in April divested its 50 percent stake in Seabank Power Ltd. for about $320 million to Cheung Kong Infrastructure Holdings Ltd.

The two gas-fired plants in the Philippines with a combined capacity of 1,500 megawatts supply electricity to the main Luzon gird and generated $1 billion in revenue last year, according to Korea Electric Power. First Philippines Holding Co. owns the rest of the facility.

Korea Electric is currently operating plants in the Philippines, with capacity totaling 2,218 megawatts, or 10 percent of the country’s power generating market.

First Philippines earlier said it might exercise its right of first refusal on Korea Electric, a major competitor in the Luzon grid.

First Gen Corp. president Francis Giles Puno said a possible partnership in the 1,000-MW Sta. Rita and 500-MW San Lorenzo natural gas projects “may not be necessarily be feasible.” The Lopez-owned First Philippines own 60 percent of the two plants.

First Gas Holdings Corp. fully owns First Gas Power Corp., the project company of the Santa Rita power plant. First Gas Holdings is 60 percent owned by First Gen and 40 percent owned by BG Consolidated Holdings (Philippines) Inc.

First Gas Power also owned the San Lorenzo plant. It is 60 percent owned by Unified Holdings Corp. of the Lopez group and 40 percent owned by BG Philippines Holdings, Inc.

Puno said Kepco operates another gas power plant--1,200-MW Ilijan combined cycle power plant also in Batangas--and is a competitor of First Gen.

“The issue... is that [we are] in potential conflict with the likes of Kepco,” he said.

He said First Gen would likely exercise its right of first refusal [because our] partner “may have differing plans that could run in conflict with us.” Bloomberg, Alena Mae S. Flores