Gotianun unit to venture into power generation

GOTIANUN-LED Filinvest Development Corp. plans to develop four liquefied natural gas (LNG) power plants across the country with a total capacity of 1,500 to 1,800 megawatts over the next five years.

The project will be implemented through FDC’s wholly owned subsidiary, FDC Utilities, which expects to invest about $1.8 billion to build the “greenfield” power portfolio. This was based on the estimated cost of building an LNG power plant of $1 million a MW, excluding further investment needed for gas terminals.

“The investment will form the third leg of the FDC conglomerate within the next five years,” FDC president Lourdes Josephine Gotianun-Yap said during the company’s annual stockholders’ meeting Friday. Power is seen eventually accounting for at least 33 percent to as much as 40 percent of FDC’s businesses, thereby complementing its two other core businesses of real estate (Filinvest Land Inc.) and banking (East West Bank).

Apart from the “greenfield” power projects, or those that will be built from scratch, Gotianun-Yap said the conglomerate would be interested to participate in the bidding for state-owned power generation assets to be auctioned by Power Sector Assets and Liabilities Management Corp.

The diversification into the power business will mark FDC’s re-entry into the infrastructure and utilities business after divesting its interest in East Asia Power Resources in the 1990s.

The new power plants would be built in strategic sites across Luzon, Visayas and Mindanao, FDC Utilities president Jesus Alcordo said. “Our target is to have the power plants we’re putting up operational by 2014 to 2015,” he said.

Alcordo, a veteran in the power sector, said the group decided on LNG as the fuel for its upcoming power plants because it was a more efficient and environment-friendly option. The LNG-fueled plants, he said, would have less carbon dioxide emissions. While LNG itself would be slightly more expensive than coal, he said the capital cost to put up an LNG-fired plant would be much lower at around $1 to $1.1 million a MW.

The investment in new power plants would be the first phase of FDC’s diversification into infrastructure and utilities, Alcordo added. The second phase would be the distribution of clean gas to fuel the transport sector like buses, which he said should help in promoting environment-friendly fuel.

Alcordo said FDC was in the final stages of acquiring the sites needed to build the power plants while gas supply contracts should be firmed up by June.
The power projects are in anticipation of a projected surge in electricity demand across the country. He said Luzon would likely face a power supply shortage by 2013 to 2014 while Mindanao was also in need of additional capacity.