Energy contracts on offer to bring in at least $7.5B

Business World Online

Posted on June 30, 2011 11:43:55 PM

FIFTEEN oil and gas exploration contracts expected to be awarded next year will bring in at least $7.5 billion in new investments, government officials yesterday said.

The country, Energy Secretary Jose Rene D. Almendras said at the launch of the 4th Philippine Energy Contracting Round, can also look forward to earning substantial royalties when the contracts are declared commercial.
“We expect investments in service contracts to be about $100 million per well, so with three to five wells per service contract there is about $500 million in each service contract,” Mr. Almendras said, adding that so far only 10% of the Philippines’ oil potential has been tapped.
The 15 contracts on offer cover onshore and offshore areas totalling some 10,000 hectares. The Energy department said it would release technical studies to interested investors on July 30. Investors have until December to signify their intention to bid and a non-refundable application fee of P100,000 per area will apply.
Mr. Almendras stressed that none of the contracts being offered were near disputed areas in the South China Sea. Some were previously offered in a previous contracting round but were cancelled after the winning investors failed to push through with their work plans.
“Some areas were cancelled contracts, mostly those in the Sulu Sea. We have every right to cancel these contracts because the agreement was to move forward with their proposed program,” Energy Undersecretary Jose M. Layug, Jr. said.
In a keynote speech, Vice-President Jejomar C. Binay said, “We want to assure fair and judicious contracting round. We want this contracting round to signal our support to the industry.”
The Energy department earlier postponed the contracting round due to questions raised by the Commission on Audit (CoA) regarding the taxation of contracts awarded by the state.
The CoA said in a 2009 audit that the government was shortchanged by about P53.1 billion in corporate income taxes from the Malampaya natural gas project for the years 2003-2009 as the levy was deducted from the government’s 60% share of the venture’s net said..
Mr. Almendras said the Energy department has met with the CoA and hopes to settle the issue within the year. -- E. N. J. David

DoE seeks ways to bring down PSALM universal charges to consumers

By: Amy R. Remo, Philippine Daily Inquirer

6:39 pm | Thursday, June 30th, 2011

MANILA, Philippines—The Department of Energy is seeking for ways to further bring down the P139 billion worth of universal charges that the Power Sector Assets and Liabilities Management Corp. (PSALM) wants to pass on to power consumers, to help ease the burden of high electricity prices.
“All financial solutions and structures are being explored to minimize the universal charges and so far, we’ve been successful. The previous filing was very high (at over P500 billion),” Energy Secretary Jose Rene D. Almendras said in a briefing on Thursday.
“We will continue (to look for ways to bring the universal charges down). That’s what PSALM should be doing in the next 15 years—to bring down those universal charges—by trying to raise as much funds,” Almendras added.
The energy chief also said he was pushing PSALM to get the best possible price for the remaining government-owned power assets and contract capacities. Any additional proceeds from the privatization will help bring down the so-called residual debt, which is estimated to amount to $3.78 billion, or P162 billion, by the end of PSALM’s corporate life on 2026.
Almendras admitted these universal charges could further increase if the remaining assets, such as the Agus-Pulangi hydropower complex in Mindanao, were not sold and turned over to the private sector.
Of the P162 billion, P139 billion will be passed on to power consumers through the imposition of a universal charge for stranded debt and stranded contract costs.
In its petition filed before the Energy Regulatory Commission, PSALM has sought to recover from all power consumers 36 centavos per kilowatt-hour over the next four years to cover the payment of stranded contract costs and a separate 3 centavos per kWh within a 15-year period to settle stranded debts.
Almendras said that PSALM should continue to conduct refinancing activities to stretch the maturities, and accelerate the collection of receivables to bring down interest costs.
PSALM spokesperson Julie Ann B. Domino said on Monday that the government agency was planning, in particular, to sell as much as $5.87 billion worth of receivables from the National Grid Corp. of the Philippines (NGCP) to help pare down debts.
PSALM was studying the outright sale of these receivables to financial institutions —which, if found viable, might likely be conducted in 2011, Domino said.
The $5.87 billion represented the amount of receivables from the NGCP, which acquired the transmission concession of the government-owned National Transmission Corp. (Transco), including interest. The principal amount (representing bid price) was $3.95 billion.
Almendras is also pushing for the extension of PSALM’s corporate life by another 10 years from 2026 to 2036, as this would help lessen the impact of the universal charges on consumers.
“Some congressmen support the idea. But it would be too premature for me to comment… Quite a number of congressmen already understand the need to do it (extend the life of PSALM),” Almendras said.

Ayala, Trans-Asia form coal power venture

Manila Standard Today

Conglomerate Ayala Corp., through unit AC Energy Corp., said Wednesday it signed an agreement with Trans-Asia Oil and Energy Development Corp. to jointly develop and operate a 135-megawatt coal power plant in Calaca, Batangas.

Ayala Corp. and Trans-Asia Oil in separate disclosures with the stock exchange said they agreed to incorporate a joint venture company, South Luzon Thermal Energy Corp., which equally owned by Trans-Asia and AC Energy. The company will have an initial capitalization of P200 million.

Trans-Asia said the project would begin construction in September and start operations in 2014.

Trans-Asia earlier tapped BDO Capital and Investments Corp. as lead arranger of an P8.75-billion loan to finance at least 70 percent of the Calaca power plant.

The 135-MW circulating fluidized bed thermal power plant in Batangas is estimated to cost P12 billion and be financed by debt and equity.

ING Bank N.V. acted as financial advisor to Trans-Asia Oil in the transaction.

“We are glad to be partnering with the Ayala group in this joint venture project. We look forward to leveraging each other’s strengths in developing and running a modern and environment-friendly facility that will contribute to the country’s power supply generation through conventional source using clean technology,” Phinma president and Trans-Asia vice chairman Ramon del Rosario Jr. said in a statement.

Trans-Asia Oil last week listed 1.16 billion worth of shares from a stock rights offering that generated some P1.16 billion in proceeds.

The company is earmarking a portion of the stock rights offering to fund the 135-MW project and the 20-MW Maibarara geothermal power plant, where Trans-Asia Oil has a 25-percent equity.

Trans-Asia chose DM Consunji Inc., the construction unit of DMCI Holdings Inc., to build the plant. It also plans to purchase its coal requirement from Sem-Calaca Power Corp., which is owned by the Consunji group, and import from Indonesia.

Ayala president and chief operating officer Fernando Zobel de Ayala said the joint venture was part of the group’s strategy to build a portfolio of power generation assets that combines conventional and renewable energy sources. Jenniffer B. Austria and Jeremiah F. de Guzman

EMB 7 issues notice on Capitol for unmet ECC conditions for coal ash dump

By Bernadette A. Parco, Oscar C. Pineda and Rizel S. Adlawan

Thursday, June 30, 2011

CAPITOL has allegedly violated four conditions in the environmental compliance certificate (ECC) of its coal ash landfill project at the former Balili property in Barangay Tinaan, City of Naga.

Environmental Management Bureau (EMB) 7 Director Alan Arranguez yesterday issued a notice of violation to Cebu Gov. Gwendolyn Garcia and Provincial Planning and Development Office (PPDO) head Adolfo Quiroga.

The ECC violations were:

* Failure to secure a permit to cut coconut trees;
* Failure to set up a P5-million environmental guarantee fund (EGF);
* Non-submission of semi-annual report on project’s compliance with ECC conditions, and;
* Failure to install sand and gravel liner and clay liner.

Address

Arranguez called Capitol to a technical conference on July 12, to discuss the violations.

Quiroga said the Province will address the violations starting today.

He said Capitol’s application for a permit to cut coconut trees is pending at the Philippine Coconut Authority. But he admitted that they have already cut some coconut trees that blocked the access road, which was built on the property.

Provincial Budget Officer Emmie Gingoyon, on the other hand, said she has certified that P5 million will be set aside for the EGF of the project.

As this developed, Governor Garcia challenged environmental groups to find an affordable renewable energy source.

Cheapest

Garcia said energy from coal-fired power plants is still the cheapest option.

She pointed out that Cebu’s demand for power will increase as its economy grows.

“Growth in power demand in Cebu is double the national average,” said Garcia, quoting President Aquino who came to Cebu to inaugurate the 200-megawatt Kepco-SPC coal-fired power plant in Naga last Monday.

Garcia said she supports the development of renewable energy sources, like wind, sun and water. But renewable energy is not cheap, she added.

“The availability of power is a basic ingredient of growth and development,” she said.

Violations

The ECC violations were observed by a team from EMB 7, which inspected the project last April 13 and May 25.

The project was built by the Provincial Government to accommodate the coal ash of the coal-fired power plants of the Korea Electric Co. (Kepco)-Salcon Power Corp. (SPC) in Naga.

In the coal ash landfill project’s ECC, the Province is supposed to put up a P5-million EGF, which will be used to pay for environmental assessments, rehabilitation of affected areas and indemnification for whatever damages the undertaking will cause.

The EMB 7 order said Capitol failed to submit the approved memorandum of agreement for the establishment of the EGF and the MMT for the project.

The MMT is supposed to be composed of representatives from the project proponent, EMB 7, a local environmental nongovernment organization, people's organization, religious organization, KSPC and representatives from other government agencies such as the Bureau of Fisheries and Aquatic Resources and Department of Energy.

Property

The coal ash landfill facility has an area of 23.2 hectares, and sits on the beachfront property purchased by the Province from the Balili family for P98.9 million in 2008.

The purchase became controversial as part of the property is submerged. The Province filed a case in court to recover about P37 million from the Balilis, which is the reported value of the submerged portion of the property.

The coal ash landfill project is the subject of another case filed by environmentalists, which resulted in the issuance of a temporary environmental protection order (Tepo) by the Regional Trial Court Branch 28 in Mandaue City.

In a hearing on the case last Monday, Quiroga told the court that the landfill itself is only seven hectares and the rest of the area will be the site of an economic zone and ecological park.

Published in the Sun.Star Cebu newspaper on June 30, 2011.

Ayala, Phinma team up on P12-billion power plant

By Zinnia B. Dela Peña (The Philippine Star) Updated June 30, 2011 12:00 AM

MANILA, Philippines -  Ayala Corp. (AC) and Phinma – two of the country’s largest conglomerates – have teamed up to jointly build a 135-megawatt power plant in Calaca, Batangas worth around P12 billion to take advantage of the anticipated strong demand for electricity in Luzon in the near term.
In a disclosure to the Philippine Stock Exchange, AC said the project, which will be undertaken by AC Energy (formerly Michigan Power Inc.) and Phinma’s energy arm Trans-Asia Oil & Energy Development Corp., will employ the environment-friendly fluidized-bed boiler technology when it comes on stream by mid-2014.
AC said the project, which will be owned 50-50 by the two powerhouse companies, will be financed by a combination of debt and equity.
“This project is part of our strategy to build a portfolio of power generation assets that combines conventional and renewable energy sources. This project will help contribute to building the much needed base load capacity to meet the growing demand for power in Luzon. This is simultaneous to our efforts to contribute in the development of alternative energy sources,” Fernando Zobel de Ayala, president and chief operating officer of AC. 
Phinma president and Trans-Asia vice-chairman Ramon R. Del Rosario Jr., for his part, said: “We are glad to be partnering with the Ayala Group in this joint venture project. We look forward to leveraging each other’s strengths in developing and running a modern and environment-friendly facility that will contribute to the country’s power supply generation through conventional source using clean technology.”
AC, through AC Energy, recently formed several joint venture agreements to develop solar and mini-hydro power projects across various sites in the country. It also recently acquired a 50 percent stake in Northwind Power that operates the wind farm in Bangui, Ilocos Norte.
AC Energy also forged a joint venture with Sta. Clara Power Corp. , an independent power producer that focuses on the run-of-the river hydroelectric plants. It will take a 70 percent stake in the joint venture and shell out an initial P600 million to develop hydroelectric power projects across the country.
Run-of-the-river hydroelectric power plant operation involves borrowing some river water to turn its kinetic energy into electricity, and returning the same unpolluted water back into the river. It is green because it does not produce harmful emissions.   Like other renewable power technologies, it is economical as it depends on the “free energy” of nature as fuel.
The project is deemed an important component of AC’s plan to create a portfolio of power assets over the medium-term that blends conventional and satisfiable energy sources and contribute to the country’s energy requirements.
AC aims to build a portfolio of power generation assets of over 1,000 megawatts in the next five years.
 On the other hand, Trans-Asia’s wholly-owned unit Trans-Asia Renewable Energy Corp. has aggressively pursued the development of renewable energy and has been awarded service contracts with potential capacity of 350 MW, making it one of the largest wind developers in the country today.

Phl seeks rich countries' help in promoting renewable energy

By Donnabelle L. Gatdula (The Philippine Star) Updated June 30, 2011 12:00 AM

MANILA, Philippines -  The Philippine government has sought the help of developed countries in promoting the use of renewable energy (RE) sources, the country’s top energy official said.
In the recently concluded Vienna Energy Forum (VEF), Energy Secretary Jose Rene Almendras specifically highlighted the need for more funding for greater research and development (R&D) on RE development.
“We call on developed countries to provide the necessary funding and technologies for green industries especially for those which we could not develop on our own,” Almendras said.
Almendras has called on the developed nations to lend a hand to developing countries in terms of new and innovative RE solutions.
“Let us work hand in hand at developing and building economically viable solutions to address our unique green industry needs,” he said.
The energy chief, a panelist in one of the forum’s sessions, said developed countries have a crucial role in pursuing a “green” economy.
“Renewable energy (i.e., geothermal, hydro, biomass, solar and wind) accounts for 27.2 percent of the total primary energy mix. With the inclusion of natural gas, the Philippines green power generation stands at 55.1 percent. We have achieved this forum’s goal of 30 percent green energy,” Almendras said.
He said the Philippines “will not stop here, the development of our green energy sector continues,” adding that RE could help bring about energy access for all as the government is looking at RE as a means for providing energy access to the remaining 27 percent of the population who remains with no access to electricity.
The Department of Energy (DOE) recently launched the National Renewable Energy Program (NREP) which will serve as a roadmap for the country’s renewable energy plans and development. Through the NREP, the DOE seeks to triple the existing renewable energy generation which stands at around 5,400 megawatts as of 2010.
The United Nations Industrial Development Organization (UNIDO) organized the VEF to facilitate international dialogue on providing universal energy access and increasing energy efficiency.
The VEF was attended by heads of state, policy makers, experts, civil society and private sector representatives.

PSALM eyes NGCP receivables to bring down universal charge

By Donnabelle L. Gatdula (The Philippine Star) Updated June 30, 2011 12:00 AM

MANILA, Philippines -  The government may use the receivables from the concession contract of the National Grid Corporation of the Philippines (NGCP) to bring down the universal charge (UC) that would be collected from electricity consumers, a Power Sector Assets and Liabilities Management Corp. (PSALM) official said.
PSALM spokesperson Julie Domino said they are currently exploring all options that would help cushion the impact of the UC on consumers.
She admitted that the government is pushing for the review of all existing power contracts, including that of the concession of the NGCP, to be able to come up with a lesser amount of UC on electricity consumers.
For the next 15 years, PSALM, an entity tasked to handle the finances and the privatization of the assets of the National Power Corp. (Napocor), will be able to collect a total of $5.87 billion with interest from the lease contract of National Transmission Corp. (TransCo) to NGCP.
With an offer of $3.95 billion, NGCP won the bid to run and operate the country’s power transmission highway in 2008. It assumed the operations of TransCo in January 2009.
Domino explained that if they would be able to sell the receivables ahead of the scheduled payment of the concessionaire, this may help in the efforts to lower the UC to be paid by consumers.
Recently, PSALM sought the approval of the Energy Regulatory Commission to collect a total of 39 centavos per kilowatthour (kwh) in the form of a UC to recover Napocor’s stranded debts (SD) and stranded contract costs (SCC) incurred over the years.
The EPIRA (Electric Power Industry Reform Act) provides that a universal charge will be imposed on all electricity end-users for the payment of Napocor’s SD and SCC.

The EPIRA defines SD as any unpaid financial obligation of Napocor that has not been liquidated by the proceeds from the privatization of the generating firm’s assets, and SCC as the excess of the contracted cost of electricity under eligible contracts over the actual selling price of the contracted energy output of these contracts in the market.
According to Domino, PSALM is now talking with various banks and financial institutions to look at the possibility of selling these receivables of TransCo.
She said government may not need to get the approval of NGCP on this scheme.
“We may give them notice. The decision to carry out this scheme would be decided upon by PSALM and the banks or financial institutions that would be buying these receivables at a discounted rate,” she said.
Domino said PSALM has been exhausting all efforts to lessen the impact of the UC.
She pointed out that selling all the Napocor assets and contracts would help lower the UC.
“What we want to do at PSALM is to sell all the assets of Napocor, it will lower the UC,” she said, noting that there are delays in the privatization of some assets and contracts – Unified Leyte geothermal complex and Agus-Pulangi hydropower plants – that are being subjected to reviews by lawmakers.
She said they are also converting most of their dollar loans to peso to save on foreign exchange losses.
PSALM, she said, is also asking Congress to lengthen its corporate life to stretch the payment of UC from its proposed 15 years to 25 years. The lifespan of PSALM, created under the EPIRA, will be up to 2026.
The PSALM official said these debts of Napocor, which were used to put up power plants that helped ease the power crisis in the 19990s, will have to be paid.
“We are urging the public to understand that these debts of Napocor would have to be eventually settled by the government. The government will need money to pay for it and the money would come from the people in any other form such as new tariff and/or new taxes,” she said.
“We need to do something about these debts (of Napocor) so we won’t be paying more in the future. The universal charge is a social payback to the efforts of the government to provide affordable power rates and to resolve the power crisis that virtually crippled the country’s economy in the past.”

Ayala Corp. continues foray into energy with 135-MW plant

Business World Online

Posted on June 29, 2011 10:33:19 PM

AYALA-LED AC Energy Holdings, Inc. has formed a joint venture with Trans-Asia Oil and Energy Development Corp. to build a P12-billion,135-megawatt (MW) power plant in Batangas that can run on coal and other fuel, a disclosure to the local bourse yesterday showed.

Construction will start in September, marking yet another foray by Ayala Corp. into the energy business in line with plans to build a 1,000-MW portfolio of power generating assets.

AC Energy and Trans-Asia will hold equal control over the new venture dubbed South Luzon Thermal Energy Corp.

The new company will have P200 million in capital upon incorporation, according to the disclosure.

The plant, whose construction will be funded by both borrowings and equity, is expected to begin operations by 2014.

Ayala described the plant as a “circulating fluidized bed,” which can reportedly use coal and biomass, according to earlier reports.

Before this, the Ayala unit had acquired a 50% stake for roughly P500 million in NorthWind Power Development Corp., which owns and operates the 30-MW Bangui wind farm in Ilocos Norte.

The facility, the first commercial wind farm in Southeast Asia, features 20 turbines.

It then went on to infuse an initial amount of P600 million into a joint venture with Sta. Clara Power Corp. for the development of run-of-the-river hydroelectric power projects across the Philippines.

Sta. Clara Power’s current projects include the 1.2-MW Loboc hydro power facility in Bohol and the 0.8-MW Amlan hydro power plant in Negros Oriental.

Trans-Asia, for its part, is the power arm of PHINMA, Inc.

It holds participating interests in several oil and gas exploration projects in addition to its power generation portfolio.

“This project is part of our strategy to build a portfolio of power generation assets that combines conventional and renewable energy sources,”said Ayala President and Chief Operating Officer Fernando Zobel de Ayala in a separate statement.

“This project will help contribute to building the much needed base load capacity to meet the growing demand for power in Luzon,” he said.

The Batangas plant comes “simultaneous to our efforts to contribute in the development of alternative energy sources,” the executive added.

Ayala’s profits for the first quarter rose 16% to P2.45 billion from P2.11 billion.

Trans-Asia, for its part, posted an income of P47 million in the first quarter from a loss of P39.6 million recorded in the same period last year.

Shares in Trans-Asia closed at P1.05, down 0.94% from P1.06 apiece.

Shares in Ayala closed at P378.20, down 1.36% from its previous close. -- ENJD

Stakeholders clamor for review of Epira

business mirror

WEDNESDAY, 29 JUNE 2011 20:42 CAI U. ORDINARIO / REPORTER

FOLlowing a decade long implementation, stakeholders spearheaded by the Freedom from Debt Coalition (FDC) are clamoring for a “comprehensive, democratic and transparent” review of the Electric Power Industry Reform Act (Epira).

FDC secretary-general Milo Tanchuling, in a statement, said various stakeholders and civil-society organizations believe that Epira, or Republic Act 9136, failed to deliver its promises.

“[The] Epira is a failure. It failed to fulfill its promises to the consumers and the economy. Instead of making our lives better, Epira makes our lives harsher and harder,” Tanchuling said.

When the Epira law was enacted, it promised to provide all Filipino consumers clean, accessible and reliable power supply, as well as affordable electricity rates.

Until now, however, many barangays in the  regions of the country are still deprived of electricity. Lack of electricity in many parts of the country is also one of the factors why economic growth has not been broad-based or has not trickled down to rural and largely agriculture-based areas.

In a previous study, former National Economic Development Authority (Neda) Deputy Director General Gilberto Llanto said a percentage point increase in the number of households with electricity relative to the total number of households is associated with an increase of about P22 million per agricultural worker in agriculture productivity.

Further, both local and international data showed that the Philippines has one of, if not, the highest electricity rates in the region. High electricity rates have also been among the biggest factors that prevent the country from improving its competitiveness.

“It’s high time we review Epira through a democratic, transparent process that involves meaningful participation of experts, consumers, especially from vulnerable sectors and other stakeholders,” Tanchuling said.

Tanchuling said among the reasons  the EPIRA has failed is due to the privatization of many power plants that provide clean energy to various parts of the country.

Through the Epira, FDC said the government is able to submit for privatization power plants like the Angat hydroelectric power plant in Norzagaray, the Unified geothermal power plant in Leyte and the Agus-Pulangi hydropower complexes in Mindanao. 

These power plants, Tanchuling said, are among the last assets left to the National Power Corp.  after privatization, which commenced with Epira’s passage in 2001.  “Aside from being sources of cheap and renewable energy, these power plants are national treasures that should remain public,” he stressed.

The FDC said the movement calling for Epira reforms is expanding, not only in Luzon but also in the Visayas and Mindanao. This was one of the conclusions in the recent National Power Summit: Epira + 10, convened by FDC.

The event was attended by 200 participants from rural electric cooperatives, nongovernmental organizations, consumer groups, academe, House of Representatives and environmental organizations collectively assessed and sought solutions to problems besetting the power industry.

The summit was cosponsored by Greenpeace, Association of Mindanao Rural Electric Cooperatives, 1st Consumers Alliance for Rural Energy Partylist, Institute for Climate and Sustainable Cities, Foundation for Sustainable Society Inc., NGO Forum on ADB, Fair Trade Alliance, Partido Kalikasan, Philippine Movement for Climate Justice  and Akbayan Citizen’s Action Party. 

Greenpeace slams Aquino’s ‘lack of leadership’ in green energy program

business mirror

WEDNESDAY, 29 JUNE 2011 20:41 P. ISLA AND J. MAYUGA

GLOBAL ecology group Greenpeace on Wednesday expressed “deep disappointment” on President Aquino‘s “lack of leadership” in the country’s  sustainable-energy program after the chief executive led the inaugural early this week of a coal-fired power plant in Naga, Cebu.

“Coal-burning for power generation has been a huge contributor to the climate-change impacts that the Philippines is dealing with right now. Instead of relying on short-sighted, reactive measures he should focus on long-term solutions that benefit everyone by delivering energy security and energy access for all,” Amalie Obusan, climate and energy campaigner, said in a statement.

Energy Secretary Jose Rene Almendras, meanwhile, underscored the need for greater research and development (R&D) in renewable energy (RE) at the recently concluded Vienna Energy Forum (VEF).

In his ministerial statement, Almendras, a panelist in one of the forum’s sessions, said developed countries have a crucial role in pursuing a “green” economy. “We call on developed countries to provide the necessary funding and technologies for green industries, especially for those which we could not develop on our own. Let us work hand in hand at developing and building economically viable solutions to address our unique green industry needs,” Almendras said.

RE from geothermal, hydropower, biomass, solar and wind account for 27.2 percent of the Philippines’ total primary energy mix. 

With the inclusion of natural gas, Almendras said the Philippines green power generation stands at 55.1 percent.

Obusan added: “Instead of continuously promoting coal, President Aquino must take this golden opportunity to make sure the massive uptake of RE is realized here in the Philippines.”

Mr. Aquino earlier graced the Department of Energy’s grand launch of the National RE Program in Manila. He, however, failed to set an ambitious but realistic target of 50 percent RE by 2020, Obusan said.  

While the nation anxiously waits for Mr. Aquino to act on his bold statements, he “is losing focus” by inaugurating coal-power stations in the provinces, she pointed out. 

Ayala and TA Oil tie up for Luzon 135-megawatt coal power project

business mirror

WEDNESDAY, 29 JUNE 2011 19:37 MIGUEL R. CAMUS / REPORTER

CONGLOMERATE Ayala Corp. and Trans-Asia Oil and Energy Development Corp. (TA Oil) of the Phinma group are teaming up for a 135-megawatt (MW) “clean” coal power plant to rise in Batangas.

Both companies separately disclosed to the Philippine Stock Exchange that they will each own 50 percent of a new firm to be called South Luzon Thermal Energy Corp. The said company will be initially capitalized at P200 million to handle the power project.

The P12-billion project was initiated by TA Oil, which earlier said it is looking foreign or local partners for its power ventures to free up resources for other projects. Ayala, in turn, is assembling a 1,000-MW renewable and traditional energy portfolio in the next five years, joining other conglomerates in diversifying into this lucrative sector.

TA Oil said earlier with the power plant will use circulating fluidized bed boiler technology and is targeted for completion in the middle of 2014.  The company said 70 percent of the Batangas project will be financed through debt instruments to be arranged by BDO Capital and Investment Corp.

“This project will help contribute to building the much needed base load capacity to meet the growing demand for power in Luzon,” Ayala president and chief operating officer Fernando Zobel de Ayala in a statement on Wednesday.

“We look forward to leveraging each other’s strengths in developing and running a modern and environment-friendly facility that will contribute to the country’s power supply generation through conventional source using clean technology,” TA Oil vice chairman Ramon R. Del Rosario Jr. said in the same statement.

Ayala is buying into the Batangas project through power arm AC Energy Holdings Inc. which in the past year has signed joint-venture agreements with various partners for solar and mini-hydroelectric projects across the country.

AC Energy also acquired a 50-percent stake in Northwind Power that operates the wind farm in Bangui, Ilocos Norte.

Apart from the Batangas project, TA Oil is studying wind power projects in Guimaras province has bought a minority interest in a geothermal venture in Calamba, Laguna and in Sto. Tomas, Batangas.

Both Ayala and TA Oil disclosed the agreement after the noontime close of trading yesterday. Ayala shares lost 1.36 percent to P378.20 while TA Oil declined 0.94 percent to P1.05 each.

PSALM eyes sale of $5.87B receivables from NGCP to pare down debt

By: Amy R. Remo
Philippine Daily Inquirer

7:07 pm | Wednesday, June 29th, 2011

MANILA, Philippines—The state-run Power Sector Assets and Liabilities Management Corp. (PSALM) plans to sell as much as $5.87 billion worth of its receivables from the National Grid Corp. of the Philippines to help pare down debts.

According to PSALM spokesperson Julie Ann B. Domino, the corporation is now studying the outright sale of these receivables to financial institutions—which, if found viable, may likely be conducted in 2011.

The $5.87 billion represented the amount of receivables from the NGCP from the sale of the concession of the government-owned National Transmission Corp. (Transco), including interest. The principal amount (representing bid price) was $3.95 billion.

Since it took over in January 2009, NGCP has already remitted close to $1 billion, Domino said. The rest of the amount will be paid for within the next 18 years.

Domino added that there were a number of issues to be threshed out before the planned sale of the receivables, such as the amount of discount to be given to the bank or institution. The proposed sale would need the approval of the PSALM board. The NGCP would only be given notice at the least, Domino added.

The sale of receivables will also help PSALM manage its liabilities, which still stood at a staggering $15.8 billion as of the end of 2010, down slightly from the previous year’s $16.5 billion.

Last year, PSALM president and CEO Emmanuel R. Ledesma Jr. already disclosed that the agency was then mulling whether it would go for securitization or an outright sale of these receivables.

“We’re looking at maybe if we can securitize that or do an outright sale… We’re still in the stages of exploring although we have met with certain investment banks and government banks. It’s an idea that we feel is feasible, possible,” Ledesma had said.

“We’re looking more at an outright sale. It’s simpler and it’s more achievable for PSALM. But again we’re looking at the full amount; if we can do the full amount it would be good,” Ledesma further said.

With an outright sale, Ledesma said PSALM would be less reliant on borrowings to help trim Napocor debts. It will also “help our balance sheet and make my job a lot easier. And my job is to pare down debt.”

Meanwhile, as part of its liability management, PSALM is also looking to stretch maturities from the current average of nine years. Domino, however, noted that PSALM has been constrained by the fact that its corporate life would end in 2026. This means that the agency may only tap loans with maturities of less than 15 years.