SM Investments and details on its deal with Chevron
Chevron geothermal power plant Tiwi, Albay, Philippines (source: flickr/sherwin_magayanes)
Alexander Richter
19 Dec 2012
Recent Chevron and SM Investments deal goes further than being just a tool to comply with Filipinization rules by legislation in the Philippines.
We reported about a deal that saw Chevron deal with the “Filipinization” ruling in the Philippines, last week. Now details emerge about the deal on the Philippine Geothermal Production Co., owned by Chevron Geothermal Inc.
Chevron Geothermal Inc. is in turn fully owned by Chevron in the U.S., had to reduce its ownership from 100 percent to 40 under the Filipinization ruling of the “Geothermal Law” of the country.
All First Investment, an investment equity company of SM Investments (SMIC), acquired a 60 percent stake in Philippine Geothermal Production Co.
Chevron is operating the steam fields of the Tiwi-Makban geothermal power plants in Laguna and Batangas under an agreemenet with state-owned National Power Corp.
It seems like discussions with the Philippine government didn’t resolve things for Chevron, as it was told to comply with that rule “by 2013”.
Chevron is now a minority shareholder, but would lead negotiations with the Energy Department for a geothermal operating contract.
It is expected that the joint venture will in the future surpass the geothermal capacity of Energy Development Corp. (EDC), currently the largest geothermal power producer in the country.
SM Group controls the National Grid Corp. of the Philippines, but is constrained to steam field development as legislation in the country does not allow cross-ownership in the power generation and transmission sectors.
It is not clear if the JV would be joining the bidding for geothermal contracts and wether SMIC would join the consortium of Chevron, Aragorn Power and Energy Corp. (of APC Group and Guidance Management Corp.) in the 100-MW integrated geothermal power project in Kalinga province.
The Chevron/ SMIC joint venture is looking at other potential geothermal areas such as Cebu, Luzon and Mindanao, Samar, Bohol and Palawan.
Source: Manila Standard
