Subic power firm signs P750-M lease extension

By Henry Empeño - April 8, 2018

https://businessmirror.com.ph/subic-power-firm-signs-p750-m-lease-extension/

SUBIC BAY FREEPORT—One Subic Power Generation Corp., a fully owned subsidiary of Phinma Energy Corp., has signed a 10-year lease extension agreement for the operation of the diesel-power plant here, a contract that will yield P750 million in lease and revenue shares to the Subic Bay Metropolitan Authority (SBMA).

Phinma President and CEO Francisco Viray and One Subic Power President Rizalino Santos signed the new contract with SBMA Chairman and Administrator Wilma T. Eisma at the SBMA office on April 2.

The power producer, which operates the 116-megawatt (MW) diesel generator originally owned by Enron Power Corp., initially committed an investment of $3.2 million, plus 5-percent variable gross revenue shares (GRS) when it took over the diesel-power plant in 2011.

The firm’s original contract was effective until 2020, but the amended agreement granted the firm a 10-year extension of its operations until 2030.

During the signing, Eisma thanked the company for being a valued partner of the SBMA and for sharing the commitment for a better Subic community.

“I do appreciate the malasakit that you put in in your business here in Subic and the way you take care of your people. That kind of behavior is important for the future of Subic because your people are also my people,” Eisma told the company officials.

The SBMA Business and Investment Department said One Subic Power Generation Corp. is one of the biggest revenue sources for the SBMA, having turned in a total of $7.2 million (P375.3216 million) in fixed lease rate, P81 million in GRS, and P4.4 million in common user service area fees since it started operations in 2011 until 2017.

Meanwhile, the 10-year extension of the firm’s contract would also provide an additional 5-percent increase in current lease rate for the first five years, and another 5- percent increase for the remaining five years, for a total of P630 million in lease rates alone.

In addition, the company’s annual GRS of P12 million would translate to a total of P120 million over the 10-year extension period, an amount that will be part of the revenue shares given out by the SBMA to neighboring local government units.