The Energy Development Corporation (EDC), the country’s biggest producer of geothermal power, was again recognized by the Institute of Corporate Directors (ICD) with a Gold Award for exemplary corporate governance practices. EDC, led by its President and COO Richard B. Tantoco, received the Gold Award in the 2010 Corporate Governance Scorecard for publicly-listed companies during the awarding ceremonies at the 8th ICD Annual Dinner last May 25, 2011 at the Manila Peninsula Hotel in Makati City.
With EDC’s improved corporate governance policies and activities, the company continued its gold streak for the second consecutive year. EDC’s higher CG Scorecard rating was attributed to its perfect scores in the following areas: Equitable Treatment of Shareholders, Role of Stakeholders and Disclosure and Transparency.
The 2010 CG Scorecard is a project of 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 the Center for International Private Enterprise.
Energy Development Corporation (EDC), the country’s leading producer of geothermal energy, reported a net income of P1.45 billion for the first quarter of the year, down by 61.4 percent from the P3.77 billion posted for the same period last year. Core net income also declined by 61 percent to P1.23 billion from P3.16 billion.
“The income result for the quarter is generally in line with our expectation for revenues to decline in the interim mainly due to forgone steam sales for our Bacman Project following the acquisition of the power plants in September 2010 and increased costs related to our acquisitions. As explained before, we are a company in transition, in investment mode for the future,” EDC President and COO Richard Tantoco said.
Also contributing to the drop in income were the lower numbers of FG Hydro in the 1Q of 2010 due mainly to lower WESM price and output due to reservoir level.
The Company also incurred higher operating expenses for the period primarily due to increased operations and maintenance expenditures for the rehabilitation of the Bacman steamfield facilities as well as taxes paid for our newly acquired assets. “It is necessary to accelerate this to re-commission the Bacman power plants within the year,” Tantoco added.
EDC, through its subsidiaries Green Core Geothermal, Inc. (GCGI) and Bacman Geothermal, Inc. (BGI), acquired the NPC-owned geothermal power plants which source steam from the Company’s steamfield assets. With the acquisition, EDC’s steamfield and power plant operations became fully integrated making its operations more efficient and cost-competitive.
The Company has invested in the rehabilitation of the Tongonan, Palinpinon and Bacman power plants to bring them back to their rated capacities. As it is, the Tongonan and Palinpinon power plants have already realized significant improvements in terms of availability and reliability.
At the close of 2010, GCGI successfully sealed long-term power supply contracts with electric cooperatives in Leyte and Negros islands.
EDC remains the largest producer of geothermal energy in the Philippines accounting for 62 percent of the total country installed geothermal capacity and is the largest integrated geothermal power company in the world. Aside from geothermal, EDC also owns and operates the 132-MW Pantabangan-Masiway hydro electric plants and has investments in wind energy projects in Ilocos Norte and other provinces.
Public-Private Partnership for the environment. Environment Secretary Ramon Paje and EDC Chairman Emeritus Oscar Lopez seal the DENR-EDC partnership for the National Greening Program (NGP) of the government.
Geothermal leader Energy Development Corporation (EDC) and the Department of Environment and Natural Resources (DENR) are joining forces and expertise in the implementation of the government’s National Greening Program (NGP). EDC’s landmark greening project called BINHI has been selected as one of the strategic programs under the NGP.
Environment Secretary Ramon Paje and EDC chairman emeritus Oscar Lopez signed a Memorandum of Agreement (MOA) today to seal the greening partnership as President Benigno Aquino III launched the NGP.
Through BINHI, the DENR and EDC will ensure the implementation of a systematic, sustainable, and meaningful reforestation program in EDC’s renewable project locations as well as in areas allocated by the DENR. Under the partnership agreement, the DENR and EDC will establish and maintain a seed bank and an arboretum of threatened species; develop a documentation mechanism or databank through an interactive website, tree certification, plantation registry and maps; make available environmental and watershed management data that can be vital to the development of policies and guidelines for reforestation and spearhead the information education and communication campaign with DENR to raise awareness on the two projects.
“EDC has always been innovative and creative in crafting programs especially those related to environmental protection. BINHI is an original and revolutionary program because it is the first serious reforestation effort that is dedicated to rescuing and securing premium, endangered native species by establishing mother trees that will be the sources of more seeds. We have a concrete and systematic program for BINHI, and we are happy that reforestation and biodiversity experts recognize our initiatives,” EDC chairman emeritus Oscar Lopez explained.
EDC’s BINHI and the National Greening Program both aim to alleviate poverty, achieve food security, preserve and enhance biodiversity, and address the problem of climate change. This partnership is also a big step towards the actual execution of EO 26 signed by President Benigno Aquino III in February this year and hopefully, will encourage more public-private partnerships for the environment.
BINHI which was launched in December 2008 is the first reforestation program to address the problem of vanishing premium native tree species by ensuring that the diversity of our Philippine forests and the gene pool of our premium tree species are restored. It aims to reforest 1,000 hectares every year for 10 years.
In 2009, on the first year of BINHI implementation, EDC planted 842,767 seedlings in 1,018 hectares all over EDC’s host provinces. Seedlings that were grown as mother trees were planted in nine partner schools in Northern Negros, inside the campus of the Philippine Science High School in Tacloban, as well as in two private parks in Bonifacio Global City and Nuvali in Laguna.
Also in 2009, the local government of Isabela province sought the assistance of EDC in protecting the Northern Sierra Madre Natural Park and the installation of a mega nursery through BINHI. EDC formalized its BINHI partnership with the provincial government via a two-year reforestation project of 200 hectares of denuded portion of the natural park. The project has already provided alternative source of income for bugadores and their families.
In 2010, EDC planted 721,319 trees and 937 hectares in Leyte, Negros Oriental, Negros Occidental, Albay, Sorsogon, Cotabato, Nueva Ecija and Isabela.
“One of BINHI’s primary targets is to educate the general public about the importance of planting not just any tree but especially those that are most precious to the Filipinos’ sustainable development and national identity. Ultimately, BINHI seeks to empower the target publics so they may go the extra green mile individually or collectively,” Chairman Lopez added.
BINHI has four major components: Tree for the Future, Tree for Life, Tree for Food, and Tree for Leisure. The program will endeavor to establish tree parks of rare and endangered species in various provinces of the country, to reforest gaps of critical forest ecosystems, expand their agroforests and plantations to serve as livelihoods for forest dwellers and to convert their project sites to ecotourism spots.
The Tree for the Future component is the flagship program of BINHI. Its aim is to recover the biodiversity of the country by establishing tree parks in various provinces and in selected schools using prime endangered species. Fifty per cent of the seeds to be harvested from the planted trees shall then be given back to EDC which will put up a seed bank for future forests. In the future, we envision that the reforestation efforts of the country will use these premium and economically important species.
The Tree for Life component aims to address the ecological problems of the country by establishing protection forests through assisted natural regeneration (ANR) or rainforestation farming. EDC will target to bridge the forest gaps between important mountain systems in order to avoid fragmentation of habitats of these valuable ecosystems.
The Tree for Food component aims to hasten re-vegetation of open and denuded forest lands and at the same time provide significant source of livelihood for the farmers living inside EDC’s geothermal reservation areas.
The Tree for Leisure component is intended to provide recreation, enjoyment and study sites for students, visitors and local communities while preserving the natural beauty and ambiance of the of mature forests.
Energy Development Corporation (EDC), the country’s leading producer of geothermal energy, posted a net income of Php4.4 billion, up by 31 percent from the Php3.4 billion reported in 2009. The increase is primarily attributable to the full year electricity revenues from its power generation subsidiary Green Core Geothermal Inc. (GCGI) which operates the Tongonan and Palinpinon geothermal power plants in Leyte and Negros Oriental, respectively.
Electricity sales from the 6,883 GWh sold amounted to Php22.9 billion accounting for 94.6 percent of EDC’s Php24.2 billion total gross revenues from the consolidated steam and electricity sales volume of 7,548.6 GWh. As compared to 2009, gross revenue from the sale of steam and electricity increased by Php5.1 billion, or 26.9 percent, from Php19 billion even as sales volume decreased slightly by 665.6 GWh, or 8.1 percent, from 8,214.2 GWh.
The recurring net income of Php7.2 billion was slightly lower than previous year’s Php7.3 billion mainly due to higher depreciation expense following the scope-out of IFRIC 12
“The consistent upward trend in our income results is the product of our two-pronged strategy of driving growth and managing risks. As we completed our acquisition targets and aggressively pursued growth opportunities both in the domestic and international fronts, we also improved our loan portfolio mix with the settlement of the Miyazawa II loan. This further reduced our exposure to the movements of Japanese Yen,” EDC President and COO Richard Tantoco explained.
Aside from its geothermal business, EDC’s hydroelectric power plants in Pantabangan, Nueva Ecija contributed Php2.1 billion in electricity revenues from the 348.5 GWh sold. This is 71.5 percent better than the Php1.2 billion revenues from the previous year due to the completion of refurbishment and upgrade of Unit 1 of the hydroelectric power plant that also increased the power generation capacity by 10 MW.
“We have embarked on a capex program that will achieve optimum availability and reliability for all our operating steamfields and power generating assets. We have also programmed the commissioning of the Bacman power plants by June this year. These investments will certainly sustain the gains we achieved last year and continue yielding more value for our shareholders,” Mr. Tantoco added.
Sealing the partnership for accelerated geothermal development in Asia are from left to right: EDC President & COO Richard Tantoco, WWF President Jose Ma. Lorenzo Tan, EDC SVP for Environment & External Relations Agnes de Jesus and WWF Chairman Vince Perez.
Geothermal leader Energy Development Corporation (EDC) and World Wide Fund for Nature, Philippines (WWF-Philippines) joined forces to accelerate geothermal development in Asia, starting with the Philippines and Indonesia, via the landmark “Ring of Fire” project. The Ring of Fire initiative aims to replicate the Philippines’ global success in sustainable geothermal production for Indonesia’s largely untapped geothermal energy resources. The Philippines gets 17 percent of its electricity supply from geothermal power plants and is the second largest geothermal energy producer in the world, next to the US while Indonesia holds approximately 40 percent of the world’s conventional geothermal reserves.
The “Ring of Fire” is in line with and in support of WWF’s 100 percent by 2050 Renewable Energy Vision and has the ultimate goal of increasing installed geothermal capacity in the region by 150 percent in 2015 and 300 percent by 2020. On top of increasing geothermal production, the project will also address issues on environmental sustainability, energy security and climate change.
To achieve this, the two partners will establish a Gold Standard Geothermal Showcase project at EDC’s 50-MW Mindanao 3 geothermal project in North Cotabato as benchmark for all geothermal projects. As the Philippines’ largest producer of geothermal energy and a consistent champion of environmental stewardship, all of EDC’s geothermal sites are models of sustainable geothermal development. Its Mindanao 3 geothermal project make an ideal Gold Standard Geothermal showcase for Asia Pacific and a testament to EDC’s 35 years of industry experience and expertise.
Through the Gold Standard Showcase project that will demonstrate the economic, social and environmental benefits of geothermal energy, EDC and WWF expect to build broad stakeholder support for accelerated geothermal development in the region.
WWF President Jose Ma. Lorenzo Tan explained “The activities of WWF within the Ring of Fire programme will focus on helping reform the energy sector in the direction of a more sustainable market, supportive of geothermal. We will work with EDC to create an enabling environment in Indonesia, taking off from our successful partnership to pass the Renewable Energy Act of 2008 in the Philippines. We will also work on the sustainability aspects, energy financing and economic issues, and on capacity building and awareness raising.”
WWF notes the high economic potential of geothermal to support the creation of a green and innovative energy sector. Geothermal plants provide 2.5 times more jobs than their coal counterparts. Furthermore there is potential – especially for the Philippines – to market knowledge and experience in the field. Large geothermal developments also lead to substantial green investments in both actual production and in surrounding communities, as well as enabling access to carbon markets.
EDC President and COO Richard B. Tantoco said “EDC recognizes the importance of collaborative efforts to promote greater use of geothermal and other renewable energy resources for energy development. The Ring of Fire Initiative is consistent with our policy to support national efforts to achieve energy security and to contribute to the global effort to address climate change issues. Relative to this, we will actively participate in the Indonesian Geothermal Round Table Discussion to share our expertise and help address relevant policy, awareness, capacity and financing issues affecting the industry.”
For WWF, a 50-year veteran of developing partnerships for the environment, working with EDC was the natural step to achieve its goals for the Ring of Fire Initiative. Having successfully collaborated with EDC for the passage of the Renewable Energy Act of 2008, WWF-Philippines is assured of a strong and committed partner in the Ring of Fire Initiative, which is part of its continued pursuit of achieving the goals stated in the RE Act.
The Ring of Fire Initiative is one of two Iconic Energy Projects currently being implemented by WWF, the other one being the Mediterranean Solar Hotspot being implemented in North Africa, Southern Europe and the Middle East. Other Iconic Projects in the pipeline will promote wind energy, address energy poverty and build Low Carbon Cities.
With a renewed direction towards developing low carbon solutions, as working models, the partnership between WWF and EDC presents a good roadmap that others will not only be able to emulate, but develop further to substantially address the climate problem.