Wednesday, May 3, 2017

EDC borrows P5 B from Security Bank



 (The Philippine Star) |

MANILA, Philippines - Lopez-led Energy Development Corp. has closed a P5-billion loan with Security Bank Corp. as part of its refinancing program for its existing debts.
In a disclosure to the Philippine Stock Exchange yesterday, EDC said it executed a 15-year and 10-year fixed rate amortizing loan with Security Bank Corp. for a total amount of up to P5 billion.
“The facility will be used to refinance existing and maturing loans of the company and for general corporate purposes,” it said.
Previously, EDC has also signed a 15-year, P3.5-billion loan deal with Union Bank of the Philippines for the same purpose.
This follows the tender offer for $100 million of $300 million 6.5-percent notes due 2022, which are listed on the Singapore Exchange Securities Trading Limited (SGX-ST).
EDC said the offer will better manage currency risk and better optimize EDC’s debt maturity profile. It will also give noteholders the opportunity to gain liquidity, the company added.
Once acquired, EDC said notes will be cancelled and will not be re-issued or re-sold.
The company has appointed Hongkong and Shanghai Banking Corp. Ltd. as dealer manager for the offer.
Last year, its consolidated net income rose 24 percent from P7.86 billion in 2015 to P9.72 billion in the previous year.
Meanwhile, core net income increased four percent from P8.8 billion to P9.2 billion due to improved performance and lower operating expenses of the Negros Island and First Gen Hydro business units.
Revenues for the period amounted to P34.2 billion, a slight decrease of P0.1 billion from the previous year, as depressed spot market prices for the Bacman and Nasulo geothermal plants’ uncontracted capacity offset gains in overall sales volume.

First Gen keen on LNG terminal



 (The Philippine Star) |

MANILA, Philippines - First Gen Corp. expressed willingness to work with government to put up a liquefied natural gas (LNG) terminal to jumpstart the industry’s development and ensure the continued use of the fuel beyond the life of the Malampaya gas project.
In a statement, First Gen confirmed its executives had meetings with Philippine National Oil Co. (PNOC) senior management wherein the  possibility of working together to develop an LNG infrastructure was discussed.
“We welcome government’s participation, through PNOC, in enabling LNG and further grow the gas industry in the country and we look forward to further talks with PNOC,” it said.
Previously, PNOC president Reuben Lista said the company is eyeing a majority stake in its planned LNG terminal possibly with First Gen Corp. and a foreign partner.
Lista said the company will be using its banked gas from Malamapaya as forward equity for the the LNG project, ensuring the state-run firm will be able to secure 40 percent of the total project cost.
Currently, there are 34 interested parties in investing in the LNG terminal, which increased from the 26 proposals the company received last month.
The LNG terminal will be composed of an initial 200-MW power plant, storage facilities, liquefaction and regasification units.
The Lopez-led firm said it has been developing an LNG terminal for the past five years to ensure that its 2,000 MW of operating gas plants will have LNG to replace Malampaya gas when it runs out.
“This will pave the way for the continued use of gas and the building of more LNG infrastructure,” First Gen said, noting it believes LNG represents the fuel of the future as it is competitive, clean and flexible and complements renewables and storage technologies.
Last year, First Gen said it is still pursuing its $1-billion LNG terminal as it looks to close the engineering, procurement and construction (EPC) tender and and partner selection process within 2017.
“An LNG infrastructure is vital to our country’s energy security and we are committed to participate in building world class facilities that are consistent with the administration’s thrust to develop the country’s infrastructure. First Gen believes LNG infrastructure can be developed not only in Luzon but also in Visayas and Mindanao which will allow access to gas in the island grids,” the Lopez firm said.

Lopez to ban open-pit mining for select ores



By Jonathan L. Mayuga -  

Environment Secretary Regina Paz L. Lopez announced on Thursday a new policy banning the open-pit mining method for gold, copper, silver and complex ores, taking advantage of the “limited time” she has in office, as she sees another rejection at the Commission on Appointments (CA).
Sought for reaction, Chamber of Mines of the Philippines (COMP) Vice President for Legal and Policy Ronald S. Recidoro said the plan to ban  the open-pit mining method is “absurd” and, again, “biased” against large-scale mines.
“Hindi pinag-aralan ’yan [It did not undergo any study],” he said, noting the order was done in haste.
An environmental advocate, Lopez made the announcement during a news conference at the Department of Environment and Natural Resources (DENR) Social Hall on Thursday, where she hinted that she may end up being rejected by the CA next week.
 “Politics is unpredictable. I want to put in place these policies while I am still here,” she said.
Lopez added that she will sign and hand down an administrative order effectively banning the open-pit mining method and putting in place policies that will ensure social justice.
The Philippines is known to have rich mineral deposits, particularly gold and copper.  It is also known to produce silver, albeit in small quantity.  Complex ores are those containing more than one economic mineral, such as ore with both gold, copper and silver.

To be affected
Three multibillion-dollar mining projects stand to be affected by the order—the Tampakan Gold Project, King-King Copper-Gold Project and Silangan Gold Project—all in Mindanao. While the plan to ban open-pit mining is not retroactive, the three companies have yet to start operation.
Asked whether  the three projects would be affected by the ban, Environment Undersecretary for Legal Maria Paz Luna said, “That was the intention.”
She said with the ban on open-pit mining, the Declaration of Project Mining Feasibility for the three projects are essentially set aside.
However, Luna said the proponents of the projects can file an appeal, or even raise legal question, in case of their inclusion in the open-pit mining ban. “They can always come to us to appeal or question the order,” she said.
Recidoro said the plan to ban the open-pit mining method is essentially banning all mining activities, except for those that do tunnel or underground mining.

Open-pit mining
Open pit, also called open cast or open-cut mining, is a surface mining technique of extracting mineral ores by their removal from an open pit or borrow.
Experts say open-pit mines are developed to extract mineral deposits near the surface, or if the surface material covering the valuable deposit is relatively thin, or the material of interest is structurally unsuitable for tunneling, such as for sand, cinder and gravel.
Mining companies consider open-pit mine as the fastest, safest way of extracting mineral-ore deposits, although environmentalists reject the method because of its destructive nature.  Open-pit mines are expanded as mineral deposits are found around the mine, in the process, creating a bowl-like hole in an area where mountain and lush forest vegetation used to exist.
According to Luna, banning open-pit mining is within the powers of the DENR secretary.  She said the DENR chief can issue rules and regulations to protect the environment against destructive development projects, such as the open-pit mining method.
Since the order specifically identifies gold, copper, silver and complex ores, coal mines, large-scale quarry and nickel mines will not be affected.
Open-pit mining methods are usually used in mining gold, copper and silver.
Lopez gave three reasons for her decision to ban open-pit mines:  1) They are lifetime financial liability to the government.  2)  They pose lifetime risk to communities; and 3) They destroy the economic potential of the area.
“I don’t like open-pit mines because once mining is over, who gets to shoulder the cost of rehabilitation?  These open-pit mines will only become financial liability of the government,” she said.

The Marcopper experience
Citing the abandoned Marcopper mines, which has three dams filled with tons of bluish-green water, open-pit mines will become man-made lakes or dams that endanger the lives of communities. The method also destroys the economic potential of an area and rehabilitation is impossible.
Left behind open-pit mines, according to experts, are usually developed as part of an ecopark, with the pit forming man-made lakes.  But the lakes are acidic and, during heavy rains, occasional discharge or spill into waterways is common.
This is currently being experienced in the abandoned Marcopper mines, which was ordered closed by the government following the 1996 accidental leak, when one of its three tailings dam gave in, dumping 3 million to 4 million tons of tailings into the Makulapnit Creek all the way to the Boac River.
The Marcopper mining disaster is considered as the worst mining disaster in the country’s history.  The accidental leak literally killed the 27-kilometer Boac River.
Although there are now signs of life in some portions of the Boac River, with fish species now reappearing, DENR officials in Marinduque cautioned that the water flowing in the Boac River is still not safe for drinking, bathing, or even fish production.

‘It’s absurd’
“We think that the proposed ban is absurd.  It is absurd.  Mining is a legitimate activity.  It’s in the Constitution.  There is even a law regulating mining.  Mining can only be done two ways, either open-pit underground.  It is not something that the DENR can mandate.  It is the ore body that determines what kind of mining method can be used to extract it,” Recidoro said.
He said in the case of nickel or copper deposits that are found 2 meters beneath the surface, it will be absurd to dig a tunnel to extract ores. “Don’t they realize that banning open-pit mining means banning quarrying and even coal?” he said.

Conflict of interest?
According to Recidoro, coal is extracted through open-pit mining.  Quarrying, particularly large-scale quarrying, is also done through open-pit mining.
“If indeed quarrying and coal are not included, is she favoring First Balfour?” Recidoro said, referring to a company owned by Lopez’s family, which operates an open-pit mine in Lobo, Batangas.
First Balfour is allegedly mining aggregates in a watershed.
“Why is there a distinction?  If she really wants to prevent the environmental effect of open-pit mining, then all open-pit mines should be banned altogether.  If it is selective, it only means she’s favoring some companies that operate open-pit mines, like coal and quarry,” Recidoro said.

DOE recommendations all set for WESM’s IMO transition plan

Published April 27, 2017, 10:01 PM By Myrna M. Velasco
http://business.mb.com.ph/2017/04/27/doe-recommendations-all-set-for-wesms-imo-transition-plan/

Recommendations are inching close to enforcement of the planned independent market operator (IMO) transition for the Wholesale Electricity Spot Market – starting with some changes at the management level of operator firm Philippine Electricity Market Corporation.

For the first time, Energy Secretary Alfonso G. Cusi squarely addressed media questions on the hurdles that they had to go through relative to forward plans for the operational set-up of the electricity spot market.

He said the IMO transition team would still be government-led and will eventually metamorphose into fully private sector-driven market operator.

He cannot say for now when is the exact timeframe for this, but he indicated that they are now carefully evaluating the critical component of WESM’s human resource – such as those on the information technology, data management, trading and other important technical bit of market operations – being the primary constituency that have to be retained in the workforce.

In the audit that the department had undertaken for the WESM, Cusi disclosed that they had to pore over PEMC’s operating expenses, fundamentally when it comes to the allocation of collected market fees.

The energy chief explained such had been an essential and decisive element of the audit process “because it has impact on the consumers, so we had to seriously look into how the market fees were spent and allocated for.”

Based on their findings, he noted that about half of the market fees went to salaries and compensation of the employees, but what they allegedly established as ‘exorbitant’ had been the level of compensation that the management had given themselves.

When asked on the actual figures, Cusi just tipped off “they’re in the millions of pesos…so I cannot tolerate that, that practice has to change,” emphasizing that the only way to end that practice is to effect re-alignments at the management level.

He was similarly quizzed on the IMO transition team that will take PEMC’s leadership, but Cusi opted to keep things under the radar for now, saying in jest that “the recommendation of the audit team is still on my table… I can’t remember the names written there.”

Cusi admitted though that it was not an easy pursuit looking at the detailed financial statements of PEMC “because of the protective order that the management has issued to its finance department.”

But the DOE secretary asserted that being the chair of the PEM Board, he had to tug his way into it so they can have a solid basis on why changes has to be enforced in the market’s management and operations.

Beyond the use of the market fees, the energy chief further hinted that other sources of WESM income are also being probed – including the supposedly millions of training fees and payments on data requests.