Philippines: Marubeni interested in increasing track in geothermal

Alexander Richter 31 Oct 2009

Reported from the Philippines, Marubeni as “One of Japan’s oldest diversified conglomerates said it is interested in more build-operate-transfer (BOT) projects in the Philippine energy sector. “We’re always looking at opportunities under the BOT,” Chihiro Shikama, Marubeni Pte. Ltd. managing director and regional chief executive officer for Association of Southeast Asian Nations (Asean), told The Manila Times.

The Philippines’ BOT law allows the private sector to put up and operate an infrastructure project and eventually turn it over to the government after recovering investments.

BOT projects usually enjoy government guarantee and tap project financing, a method of funding a project that limits a company’s exposure to the amount of its investment in the venture without recourse to the firm’s other assets.

Marubeni, along with Tokyo Electric Power Co. Inc., earlier formed TeaM Energy Corp. and bought the Philippine generating plants of US-based Mirant Corp.

The two power plants—the 735-megawatt (MW) coal-fired Pagbilao and the 1,218-MW coal-fired Sual generating facilities—are under BOT contracts with state-owned National Power Corp. (Napocor). The Pagbilao and Sual contracts would expire on 2025 and 2024, respectively.

The Aboitiz group recently bagged the contract to serve as independent power producer administrator (IPPA) of the Pagbilao facility. The IPPA deal authorizes the holder to market the output of the power plant, and take over the facility upon expiration of the BOT contract with Napocor.

The Aboitiz IPPA gives it the right to market 700 MW of Pagbilao’s output.

The San Miguel group secured the IPPA contract for the Sual facility, giving the conglomerate the right to market 1,000 MW of the plant’s output.

Expand geothermal portfolio

Shikama said Marubeni is also in talks with Philippine companies to expand the former’s geothermal portfolio.

“In the Philippines—not like in Indonesia—there is not much risk in geothermal development because the government does the development,” he said, referring to the BOT arrangement.

Shikama said Marubeni is “still in negotiations on the price” of an equity stake the Japanese firm wants to acquire in a potential Philippine partner that operates geothermal facilities.

He said that while asset prices have gone down because of the global financial crisis, the unnamed Philippine company is asking for a premium.

First Gen Corp. earlier disclosed that it was in talks with Marubeni to sell a stake in Red Vulcan, which controls Energy Development Corp. (EDC), the Philippines’ biggest geothermal energy producer.

But the Lopez-led First Gen recently said that it was no longer pursuing the sale of an interest in Red Vulcan, following the company’s successful refinancing of a maturing P1.38 billion obligation.”

Source: The Manila Times