First Gen eyes stake in Pagbilao project

Lopez-led First Gen Corp. aims to take “less than 20 percent” stake in the 400-MW expansion for the Pagbilao coal-fired power plant in Quezon province, company president Giles Puno told reporters.

“There’s really a need for additional capacity. We’re looking at participating (with) a little less than 20 percent,” Puno said.

Construction for Pagbilao’s expansion is expected to start next year and should be completed in 2017, Puno said. The facility’s current capacity is 735MW.

Puno said First Gen would decide on its position on the project as soon as details were finalized by existing plant operator Team Energy Philippines (a joint venture between Japanese firms Marubeni Corp. and Tokyo Electric Power Co.) and independent power producer contract administrator Aboitiz Power Corp.

“The consortium of Aboitiz and Team Energy is finalizing the EPC (engineering, procurement and construction) contract, the supplier where they’re going to source the equipment. Once they do that and they reach financial close, First Gen will have an option to participate,” Puno said.

Earlier, Puno said an agreement with Marubeni and Tokyo Electric gave First Gen the option to have an equity participation of up to 33 percent in the planned Pagbilao expansion. However, Team Energy and Aboitiz Power are set to undertake the expansion under a 50-50 joint venture. Theoretically, this leaves First Gen with about 15 percent of the whole expansion project.

Puno admitted that the plan to buy a stake in the expansion of a coal project was “a little bit of going against our religion” since First Gen’s power portfolio consisted of natural gas and renewable energy power plants. Puno said there had been initial talks following previous announcements of the expansion power project, but there were no clear details yet as to how the proponents would proceed with the project.

For the first half of 2013, First Gen’s net income attributable to equity holders of the parent reached $77.7 million or 17.4 percent lower than the $94 million registered in the same period of 2012.

In a disclosure to the Philippine Stock Exchange, First Gen, the primary holding company for the power generation and energy-related businesses of the Lopez Group, attributed the income drop to lower income booked by subsidiaries.