EDC subsidiary pays PHP1.28 billion for Bacman power plants

Bacman Geothermal, Inc. (BGI), a wholly owned subsidiary of geothermal leader Energy Development Corporation (EDC), has achieved closing on the 150-MW Bacman geothermal power plant acquisition after remitting to PSALM on September 3 the sum of PhP1,279,725,000 representing full payment of the purchase price for the power facilities. The turnover followed BGI’s submission of the highest offer price for the Bacman plants in a competitive bid conducted by PSALM last May 5 and its successful completion of the conditions precedent required in the Asset Purchase Agreement (APA).

“Our main focus now is to rehabilitate these plants and restore capacity and reliability factors to 100 percent to add clean, reliable and much needed power to the Luzon grid,” EDC President and COO Richard Tantoco said.

Located in the towns of Bacon, Sorsogon and Manito, Albay in the Bicol region, the BacMan plant package consists of two steam plant complexes. The BacMan I geothermal facility comprises two 55-MW turbines, which were both commissioned in 1993. BacMan II, on the other hand, consists of two 20-MW units namely, the Cawayan located in Barangay Basud and the Botong in Osiao, Sorsogon City. The Cawayan unit was commissioned in 1994 and the Botong unit in 1998. EDC supplies the steam fuelling these plants.

“The acquisition of NPC’s geothermal power plants is one of our major platforms for future growth. With the turnover of the Bacman power plant, we are now fully integrated across the geothermal value chain. This vertical integration will result in a seamless and more efficient operations,” Tantoco added.

The Bacman plants boost EDC’s current portfolio of geothermal power generation assets to 1,199 MW. EDC also acquired the 112.5-MW Tongonan and 192.5-MW Palinpinon geothermal plants auctioned by PSALM last year.

EDC’s other geothermal power generating assets are the Unified Leyte plants consisting of the 125-MW Upper Mahiao, 232.5-MW Malitbog, 180-MW Mahanagdong and 51-MW Optimization plants, the 106 MW Mindanao 1 and 2 plants in Kidapawan, Cotabato, and the 49-MW Northern Negros geothermal plant in Negros Occidental.

EDC H1 net income soars 113.7% to PhP5.74 billion

Combined power plant operations continue to boost financial performance of geothermal leader Energy Development Corporation (EDC) as it posted a 113.7 percent increase in its income for the first six months of the year.  The company earned PhP5.74 billion for the first half of 2010, more than double the PhP2.69 billion registered for the same period in 2009.

Of its different subsidiaries, First Gen Hydro, operator of the 122.5-MW Pantabangan-Masiway hydroelectric plants contributed PhP 1.06 billion to the total net income for the first half.  Income from the 106-MW Mindanao geothermal plants improved to PhP436.4 million from PhP343.2 million with the elimination of BOT fees after the turnover to EDC in June last year.   However, as a stand-alone entity, Green Core Geothermal, Inc. (GCGI) which operates the 305-MW Tongonan 1 and Palinpinon power plants reported a net loss of PhP0.26 billion.

“The successful acquisition of NPC owned geothermal power plants is an integral component of our forward integration growth strategy.  Despite investor concerns on the immediate impact of loss steam revenues for the Bacman acquisition, EDC’s purchase of the power plant remains to be value-enhancing for the company,” EDC President and COO Richard Tantoco explained.

EDC submitted the highest complying bid for PSALM’s auction of the 150-MW Bacman plants last April.  It has programmed the rehabilitation of the plants to bring them back to full capacity within 18 to 24 months.

“Complementary to this is our initiative to strengthen our balance sheet by redenominating our loans and smoothening out lumpy maturities.  We are confident that we can sustain this momentum for the balance of the year with the continued seamless integration of the newly acquired plants with their fuel source – steamfields that we have been operating for the past three decades,” Tantoco said.

The company’s core net income also increased by 89.2 percent to PhP4.85 billion from PhP2.57 billion.

EDC settles JPY22 billion Miyazawa II loan

Geothermal leader Energy Development Corporation (EDC) moves closer to its goal of overhauling the currency mix of its loan portfolio as it settled on June 28 its JPY22B Miyazawa II debt.  With the settlement, EDC’s JPY loans now account for only 13 percent of the company’s total loans from the 87 percent and 40 percent reported in 2008 and 2009, respectively.

“Our investors have singled out the predominance of JPY denominated debt as a major concern because of our vulnerability to forex translation losses.  Since taking over in 2008, we have fully addressed this concern with the successful redenomination of our debt stock to one that is now predominantly peso, or 66 percent of total loans.  From this point on, our income statement will be more predictable as it is no longer subjected to large swings in the amount of unrealized forex losses/(gains) now that EDC has become less reliant on Yen denominated debt,” EDC President and COO Richard Tantoco explained.

During the first half of 2010, EDC had successfully hedged the US$:JPY exposure of its entire JPY 22B maturity and this has benefited the company about  Php 181.1 million.

The Miyazawa II loan was among the legacy loans which PNOC EDC carried over into the present day fully private EDC. It was used to fund the investment and working capital requirements of PNOC EDC’S operating projects shortly after the Asian Financial Crisis.

EDC posted a PhP3.80 billion net income for the first quarter of 2010, up 68 percent from the PhP2.27 billion posted for the same period last year.  Revenues from its two subsidiary corporations, Green Core Geothermal, Inc. (GCGI), operator of the 192.5 MW Palinpinon and 112.5 MW Tongonan I geothermal power plants, and First Gen Hydro Power Corporation (FG Hydro), operator of the Pantabangan and Masiway hydroelectric plants, were largely responsible for the significant rise in net income for the quarter, contributing PhP1.22 billion.

EDC gets gold in corporate governance

For the third time in a row, Energy Development Corporation (EDC), the country’s largest producer of geothermal energy, made it to the elite list of corporations that ranked high in corporate governance.  EDC is among the gold awardees scoring 95 percent and above in the 2009 corporate governance scorecard, topping its previous year’s silver award.  The Institute of Corporate Directors (ICD) in partnership with the Securities and Exchange Commission, Philippine Stock Exchange, Institute of Internal Auditors of the Philippines, Ateneo Law School, and Center for International Private Enterprise conducted the evaluation in order to assess the compliance levels of Philippine corporations.  Shown from L-R are ICD Chairman Dr. Jesus Estanislao, EDC Director Vince Perez, EDC Vice Chairman and CEO Paul Aquino, EDC Chairman Oscar Lopez, EDC President & COO Richard Tantoco, SEC Commissioner Manuel Gaite and Ateneo Law School Dean Cesar Villanueva.

EDC Unit Seals Power Supply Agreement With Aklan, Iloilo Electric Cooperatives

Deal for clean power. L-R: FGES VP for Marketing Arman Lapus, AKELCO President Wayne Malilay, EDC President & COO Richard Tantoco; AKELCO General Manager Chito Peralta, ILECO 1 Board Member Francisco Toledo, Jr. , ILECO 1 President Atty. Lex Anthony Cris A. Colada, Richard Tantoco, and ILECO I General Manager Wilfred L. Billena

Green Core Geothermal, Inc. (GCGI), a subsidiary of geothermal leader Energy Development Corporation (EDC), signed 10-year power supply agreements with the Iloilo Electric Cooperative (ILECO 1) and Aklan Electric Cooperative (AKELCO).  Based on the contracts, GCGI will supply AKELCO with 18 MW for Y2010 and 10 MW from Y2011 to Y2020.  ILECO 1, on the other hand will be supplied with 3 MW from Y2010 to Y2012 and 18 MW from Y2012-Y2022.  Power will come from the 112.5-MW Tongonan 1 in Leyte and 192.5-MW Palinpinon plants in Negros Oriental which GCGI won in a bidding by PSALM last year.

“We’re very glad to have ILECO 1 and AKELCO as partners in delivering clean energy to Iloilo and Aklan.  EDC’s long-term contracts with these two cooperatives will support the growth needs of the two cooperatives with clean, reliable and affordable power.  Since the industry is leaning more towards clean energy, EDC, with its 34-year head start in the geothermal business, is well positioned to address the supply shortage in the Visayas grid,” EDC President and COO Richard Tantoco said.

AKELCO General Manager Chito Peralta likewise expressed satisfaction with the agreement.   “Getting power has always been a challenge for us because as you know, Aklan is located at the tip of the grid.  Now Green Core will be able to augment the power supply of the province and encourage more tourists to visit Boracay.”  AKELCO services 17 municipalities in Aklan and two municipalities in Antique.

Tantoco added that the pricing of indigenous renewable energy resource such as geothermal is independent of any indexation to movements in global energy indices. Hence, ILECO 1 General Manager Wilfred Billena is confident that the contracts “will also result in lower power rates for us in Iloilo.”  ILECO 1’s franchise areas cover 15 municipalities.