MANILA, Philippines?First Gen Corp., of the Lopez group, reported a 79.5-percent drop in net income to $14.7 million in the first half of the year from $108.9 million in the same period in 2007, following acquisition of the controlling stake in geothermal power producer Energy Development Corp. from state-owned Philippine National Oil Co.

The acquisition resulted in interest expense and financing charges of $20.1 million for First Gen subsidiary Red Vulcan Holdings Corp., the entity that acquired the EDC stake.

First Gen chief financial officer Francis Giles Puno said in a disclosure to the Philippine Stock Exchange: ?Our net income is significantly lower than last year?s as a consequence of the amount of debt we took on in acquiring a controlling stake in EDC. Moreover, market volatility has led to a more challenging financial environment.?

Apart from expenses related to the acquisition of EDC, First Gen?s profit plunge was also attributed to expiration of the income tax holiday of the 1,000-megawatt Santa Rita gas-fired power plant, which its First Gas Power Corp. subsidiary owns and operates.

First Gen also recorded reduced net income from the 112-megawatt Pantabangan-Masiway hydropower facilities, as generation rates and wholesale electricity spot market prices fell.

A foreign exchange loss of $5.5 million was also recorded for the Pantabangan-Masiway plants in the first half. Edited by INQUIRER.net