EDC to apply for more than 10 concession areas in Chile

business mirror

SUNDAY, 17 JULY 2011 17:53 PAUL ANTHONY A. ISLA / REPORTER

LISTED Energy Development Corp. (EDC), the country’s largest geothermal power producer, is considering applying for 10 more concession areas within Chile as it plans to boost its overseas business.

Richard Tantoco, EDC president and chief executive, said in an interview that they are expecting to receive results from these bids within the year. “We have applied for 13 concession areas and submitted bids for five other concession areas in Chile. And we expect some positive news on some of these within the year,” he said. 

Tantoco added that they expect another $75-million financing from International Finance Corp. (IFC) before the end of the year.

IFC, the private sector investment arm of the World Bank, recently granted EDC a $75-million financial aid to partly support its venture overseas. “The fund will also enable EDC to offer its geothermal energy expertise to countries like Indonesia, Papua New Guinea and Chile,” IFC said.

Aside from Chile, Tantoco said they are also exploring other areas for possible investment overseas. However, EDC’s efforts in other countries are not as aggressive as in Chile.

“In Indonesia, particularly, progress has been slower as we continue to explore areas and consider joint venture with holders of concession areas. At the same time, we are also applying for greenfield concession areas,” he said.

Tantoco said EDC will always have an advantage on geothermal development ventures. “Given our 35-year headstart and knowledge base with the largest ‘wet-stream field laboratory’ in the world, we are continuously being approached by potential joint venture partners in Chile, Indonesia and other countries,” he said.

Tantoco however pointed out that the development of these ventures overseas would still take a lot of time. “It will be a long time as the development cycle will take at least six years. These overseas undertakings may takeoff between 2015 and 2016,” he said.

Though Tantoco declined to disclose how much they spend for their overseas operation, he quickly added that a geothermal development project would cost to about $4 per megawatt (MW).

EDC created a subsidiary, EDC Chile Limitada which is a limited liability company incorporated on February 11, 2010 in Santiago, Chile. The unit was created for the purpose of exploring, evaluating and extracting mineral or substance to generate geothermal energy in the South American nation.

Based on the bidding rule, EDC has to show its financial support to EDC Chile to be able to participate in the country’s geothermal auction. EDC issued a letter of credit amounting to $80 million as evidence of its financial support to its subsidiary.

Apart from Chile, EDC had also set up a representative branch in Indonesia as part of the initial move to explore geothermal development business in that country. At present, EDC in involved in drilling operations in Lihir Gold Ltd. in Papua New Guinea. EDC’s contracts with LGL have been its major source of drilling revenues since 1999.

EDC has also been invited to bid for a geothermal drilling contract in Kenya, and is also looking at other areas overseas such as those in south Asia and in the Middle East.