EPIRA prevents SM’s entry into power generation

Manila Bulletin 
By Myrna M. Velasco 
Published: June 20, 2013 
The explicit provision of the Electric Power Industry Reform Act (EPIRA) on cross-ownership ban between generation and transmission sub-sectors will prevent SM Group into expanding its business in the electricity sector into power generation.
The Department of Energy (DOE) then is being challenged by stakeholders in the power industry to make clear pronouncements on the submission of APC Group Inc. of tycoon Henry Sy for a planned 100-megawatt power project in Kalinga province.
The National Grid Corporation of the Philippines (NGCP) is an affiliate of the SM Group; and the same with Philippine Geothermal Production Company (PGPC), which is the Sy group’s joint venture with American firm Chevron of which primary business function is geothermal resource exploration and production.
The APC group is another SM affiliate which is a subsidiary of its leisure and gaming arm Belle Corporation.
It was gathered from the energy department though that there are no formal documents submitted to government yet that the SM group will take over the Kalinga project. The original service contract for that geothermal prospect had been with GMC and Aragorn group.
The cross-ownership prohibition was a legal hurdle that was even acknowledged by NGCP president Henry T. Sy, Jr.; thus, even his company’s wish to plunge into power generation for its ancillary services needs cannot be pushed forward.
The framers of the EPIRA under Section 45 made sure that the ban on cross-ownership shall be absolute, with them anticipating that some groups will work around the policy to breach some provisions.
APC group corporate secretary Edmundo L. Tan, in a disclosure to the Philippine Stock Exchange, has confirmed the statement of its company officials that the SM group will be investing $300 million for a power plant project in the Cordilleras, to be undertaken with Chevron.
The drilling for geothermal wells is expected to kick off next year; while the power generation facility is targeted on stream around 2018.
Department of Energy (DOE) director Mario Marasigan said they will study the planned developments of the SM group in the Kalinga geothermal prospect, keeping in mind the provisions of the law.
He stressed that at least in SM group’s entry into the Tiwi and Makiling-Banahaw projects through PGPC, their business engagement will be limited to steam exploration and production and selling it to the off-taker power plants of the AP Renewables Inc. of the Aboitiz Group.   source