The Philippine Star
05/16/2006
Publicly-listed Corro-Coat Inc. said yesterday it will acquire 100 percent of its affiliate, coco methyl-ester (CME) manufacturer Chemrez Inc., through a share swap deal.
In a disclosure to the Philippine Stock Exchange (PSE), Corro-Coat said its board approved the "acquisition of the bio-diesel project of Chemrez and acquire 100 percent equity in Chemrez via a share swap."
Corro-Coat is a subsidiary of D & L Industries owned by the Lao family. D & L introduced powder coating in the Philippines in 1981. Its power coating business was spun off in 1989 to another company Corro-Coat., which then listed its shares at the PSE in December 2000.
In the same disclosure, the company said its board also approved the increase in the company’s authorized capital stock to P2 billion from P1 billion.
The Corro-Coat board likewise approved the change in corporate name to Chemrez Technologies Inc.
Due to the transaction, Corro-Coat’s shares were temporarily suspended from trading under further disclosures relative to the transaction made by the company.
Corro-Coat is a leading domestic manufacturer and distributor of powder coatings, a protective material, which is applied to a metal surface through an electrostatic coating process.
Dean Lao Jr., Chemrez operations manager, said they plan to list about 10 percent of Chemrez’s shares to raise funds to partly finance the construction of its P1.5-billion second coco-biodiesel plant.
Lao said the second plant will ideally be located near a seaport or within an economic zone. The second plant will triple the current production capacity of Chemrez at 180 million liters a year.
He said the second plant could be located either in Batangas Bay, Subic Bay or Cebu.
Chemrez recently inaugurated its P950-million coco-biodiesel plant in Libis, Quezon City. It has capacity of 60 million liters a year.
Chemrez is a leading manufacturer of colorants, resin, and specialty chemicals in the country. Chemrez produces the bio-diesel brand BioActiv BD 100.
Both Corro-Coat and Chemrez are members of the D & L Industries Group, a leading provider of colors, chemicals and plastics in the Philippines.
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The Philippine Star
05/16/2006
President Arroyo has slashed import tariffs on crude oil and refined products for six months to cushion the impact of record-high world market prices of crude oil on local gasoline prices and the country’s economy, Malacañang announced yesterday.
Tariff levels, currently at three percent, would be reduced to between two and zero percent "based on certain triggers indexed to oil prices in the world market," Mrs. Arroyo said in Executive Order No. 527, released by the Palace yesterday after being signed Friday.
She said that "soaring fuel prices to unprecedented levels, brought about by current international and geo-political tensions and tight gasoline supplies, warrant the modification in the rates of duty on crude petroleum oils and refined petroleum products to protect consumer welfare."
"The tariffs shall be automatically restored as international oil prices move down based on the same trigger prices," the EO said without giving any specific price levels.
EO 527 would be in effect over six months, subject to government review, it added.
"An automatic tariff mechanism, based on certain triggers indexed to international oil prices, would soften the impact of high and rising world prices on the economy and the consuming public without necessarily draining government revenues," the order said.
The "triggers" pertain to a certain level of oil prices where the upward and downward adjustments in tariffs could be made. The duties on oil would be reduced to two percent, and one percent or zero depending on a determined price level of crude oil in the world market.
Press Secretary Ignacio Bunye said the Tariff and Customs Code of 1978 allows the Chief Executive to increase, reduce or remove existing rates of import duty as well as to modify the form of tariffs.
EO 527 is a quick fix from the President while Congress is still hammering out long-term measures to address the oil price crisis.
The order aims to strike a balance between the need to help Filipinos, particularly low-income families, to cope with rising fuel prices and to maintain the government’s revenue needed for its economic recovery program, Bunye added.
Meanwhile, Mrs. Arroyo also removed import duties on capital equipment, spare parts and accessories required by new businesses as well as those with expansion plans. The tax incentive will be offered for five years.
"Importation of capital equipment is one of the major cost burdens of business enterprises in their start up operations," Mrs. Arroyo said in the order, also signed Friday.
"Allowing duty-free importation will make the Philippines more competitive in attracting industries in the face of an increasing competitive Asian market for foreign direct investments," she added.
EO 528 noted that there is a need to extend the duty-free treatment on enterprises registered with the Board of Investments and operating in economic zones and free ports.
The order, however, stipulates that a zero tariff can only be applied if the equipment is not manufactured domestically in sufficient quantity and of comparable quality and price.
A BOI-registered firm cannot dispose of the imported equipment without prior approval from the agency within five years of the date of importation.
Bunye could not estimate how much of the revenues would be foregone through the two presidential orders.
He said the move does not run counter to the administration’s efforts to reduce fiscal incentives to business and investments to generate more income for the government.
The Arroyo administration had earlier backed off from proposals to temporarily halt the 12-percent expanded value-added tax on oil products after foreign lenders reacted negatively, warning that Arroyo administration’s target to balance its national budget by 2008 could be undermined.
The government implemented a 12-percent expanded value-added tax in February, which is the centerpiece of Mrs. Arroyo’s fiscal reforms intended to bridge the budget deficit and forestall a looming fiscal crisis. The expanded tax is expected to yield at least P80 billion in fresh revenues annually.
EO 527 was issued following a proposal last month from Finance Secretary Margarito Teves and Energy Secretary Raphael Lotilla for the government to peg the tariff rate according to the world market price of crude oil.
The move, Teves said, would have the biggest impact of the administration’s efforts to shield local fuel prices from soaring world oil prices, and would at the same time ensure that government revenues are not affected by the possible tariff adjustments.
He explained that as prices of crude go up the tariffs would go down and vice versa. He said the tariff adjustments would be made in one-percent increments.
Teves explained that since the tariff is imposed as a percentage, the government’s revenue projections would not be significantly affected. He said the government loses P2.5 billion in revenues for every one-percent reduction in tariff.
Lotilla said pump prices of gasoline, diesel and kerosene could be reduced by as much as a peso per liter on the average if tariffs were reduced.
Teves said oil prices are based on the Dubai price and that of the West Texas Intermediate (WTI). The WTI, which is the gauge normally announced in the media, is usually higher by $6 to $7 than the Dubai oil price, which the Philippines follows.
Government economic managers also warned that growth and inflation projections for the country this year and in 2007 might have to be revised if world oil prices continue to reach record highs.
Socio-economic Planning Secretary Romulo Neri had said that for every $10 increase in world oil prices, the country’s gross domestic product (GDP) growth slows down by 0.2 percentage points. GDP is the total value of goods and services produced domestically.
Neri said the Development Budget Coordinating Council projected that inflation is expected to hover between 7.3 percent to 7.9 percent this year as long as its assumption holds that Dubai crude does not exceed $62 per barrel for 2006.
Other inflationary factors, he said, include electricity rate increases and pressure from wage increases.
On the impact of the country’s balance of payments, Neri said for every $5 increase on the price of crude oil per barrel, an additional $631 million is needed to finance oil imports.
Mrs. Arroyo had earlier called on the public to brace for belt-tightening measures as she warned of possible adverse impacts of rising world market prices of crude oil on the country’s economy.
Government economic managers believe, however, that the country could weather the latest oil price surge as the government has learned from its experience last year. — With AFP
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Manila Bulletin
may 15, 2006
Aboitiz Equity Ventures (AEV) is being wooed to get in as a new partner to First Metro Investment Corporation (FMIC) in power generation assets in Visayas that it recently acquired from Mirant Corporation.
"Aboitiz will likely come in as partner to First Metro," a highly-placed source has disclosed; noting that the deal is due to be sorted out within the first half of the year.
Atlanta-based Mirant confirmed the sale of 50 percent Mirant Global Corporation; which is the corporate vehicle for its power assets in the Visayas; covering the Panay power facility in Iloilo; Toledo plant in Cebu and the Nabas generation asset in the Visayas.
The sale now positions FMIC, which is the investment arm of the Metrobank group, as the owner of thesefacilities.
However, to inject some operational capability in the operation of these assets, it was noted that theinvestment firm is negotiating with the Aboitiz group to come in as its partner. The parties are not keen on disclosing yet any preliminary details of thenegotiations.
Meanwhile, in its disclosure at the Philippine Stock Exchange, FMIC noted that it "is not buying the shares of Mirant Philippines in MGC," instead, it averred that it merely served as arranger in the sale process.
It has been indicated that if Aboitiz would buy into the MGC shares, this would be a beneficial development, especially in its bid to augment capacity in areas served by its affiliate distribution firm, the Visayan Electric Company.
It would be noted that Mirant Toledo has been named among those eyeing to join the bidding for the tenders sought by AEV for additional 200-megawatt capacity that VECO would be needing on stream by 2010.
For the new power capacity being solicited, the Aboitiz-controlled utility firm noted that interested investors "can propose any technology, fuel mix or plant configuration" as long as this will meet the prescribed configurations.
The utility firm further emphasized that the plant shall have a gross capacity of 100-MW deliverable by January 1, 2010; and the other 100 MW shall be set on stream by January 1, 2011.
Aside from Mirant Global, the other offers were from Kepco-Salcon Power Corporation, Applied Research Technologies Philippines, Inc. and PacificManufacturing Resources.
VECO said it opted a facility constructed in Cebu so it can avoid any transmission bottleneck and as a way of ensuring that rates turn out more competitive.
It has been emphasized that the siting of the facility has bearing on "the long term reliability and supply of electric power to its customers and for making rates reasonable." The price reference is the grid rate of the National Power Corporation in thearea. (MMV)
VECO’s franchise area covers the Metro Cebu area and about six neighboring municipalities. It counts around 295,000 households as customers; in addition to commercial establishments and industries.
Forecasts indicated that the power supply of VECO will go up to 354 MW starting 2010; and such necessitates additional 200 MW tucked into its system.
The power facility being solicited set outs specification that it shall be capable of operating on a baseload mode and shall have an operating life of 25 years. (MMV)
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Manila Bulletin
May 15, 2006
With the government’s desperate bid to fast track the privatization of the National Power Corporation’s (NPC) generation assets, Malacañang is seriously considering to install retiring Energy Regulatory Commissioner Oliver B. Butalid to head the Power Sector Assets and Liabilities Management Corporation (PSALM) after he bows out of current office next month.
It was gathered that sitting PSALM president Nieves L. Osorio will likely get appointment as a Commissioner of the ERC; replacing one of the retiring officials of the regulatory body.
Aside from Butalid, ERC Commissioner Jesus N. Alcordo will also be ending his tenure this June. Several names have been listed as likely replacements, including ERC Director and General Counsel Francis Saturnino Juan and former East Asia Power Corporation executive Jose Reyes.
A ranking energy official has hinted that the Palace is really bent on pushing forward NPC’s privatization; and they are keenly eyeing somebody who can stir up investment interests; and that potential is supposedly being seen in Butalid.
With his stint in government service, including that of the Department of Trade and Industry; and the experience and knowledge build-up he had acquired while serving ERC, they noted that Butalid would likely deliver on expectations as far as privatization of the state-owned monopoly is concerned.
Given the anticipated re-aligments in government agencies which are in-charge of NPC’s privatization, a propaganda has been mounting to stop the sale of the state-run power firm’s generation facilities, with some quarters preferring that investments would ground to a halt, so that this country would suffer new round of power crisis and drags NPC into signing new and expensive power purchase agreements.
PSALM itself has been complaining that NPC has not been cooperative enough in providing all documents needed by interested investors in due diligence processes; hence, making it doubly hard for Osorio and others before her, to carry out the task of divesting the generation assets.
It would be recalled that it had been played several instances in newspaper headlines and columns that land titles, permits and other documents are not being made easily accessible to interested investors.
Some quarters at the state-owned NPC are reportedly irate at the provisions of the Electric Power Industry Reform Act (EPIRA) that latch onto the lap of the private sector, primarily distribution utilities, the mandate of contracting for new round of power supply for the country.
This situation can only be reversed if there is a power crisis situation; thus, the earnestness of the NPC’s anti-privatization camps to wait when supply shortages are experienced, so that supply procurement can be given back to NPC; notwithstanding past experience that such set-up committed the entire country to mounting debts and budget deficits.
Section 71 of the EPIRA prescribes that "upon determination by the President of the Philippines of an imminent shortage of the supply of electricity, Congress may authorize, through a joint resolution, the establishment of additional generating capacity under such terms and conditions as it may approve."
Speeding up divestment of the NPC assets is seen very crucial because this will also determine the pace of other reform process set for the power industry; including the introduction of open access and retail competition which are envisioned to provide choices for electricity consumers and array of benefits for them in the long-run.
While propaganda works are intensifying from anti-privatization segments, they have launched offensives on lawmakers and media supposedly "taunting Energy Secretary Raphael P.M. Lotilla and Osorio for bending over backwards to sell the assets with whatever it takes."
The foray of retail competition in the power industry would only become possible until after 70-percent of the NPC’s generation assets in Visayas and Mindanao would have been transferred under the charge of private investors.
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The Philippine Star
05/15/2006
First Gen Corp. and its partner British Gas (BG) Plc. are firming up the construction of a 550-megawatt (MW) Greenfield combined-cycle gas-fired power plant.
First Gen vice chairman and chief executive officer (CEO) Peter Garrucho Jr. said the new San Gabriel natural gas-run power facility will be located adjacent to the existing natural power plants of First Gas Power Corp. (FGPC)-Santa Rita and San Lorenzo plants.
Garrucho said the plant will utilize domestic natural gas from Malampaya field and/or imported liquefied natural gas (LNG).
The FGC official said they hope to complete the project in four years.
"We expect San Gabriel to come on stream in the latter part of 2010," he said. The new power plant is expected to cost $400 million.
In December 2005, the project obtained its environment compliance certificate from the Department of Environment and Natural Resources.
According to Garrucho, the local host communities have endorsed the project.
First Natgas Power Corp. (FNPC), one of the First Gen subsidiaries, is being proposed to operate the San Gabriel project.
FNPC is currently conducting a feasibility study for the said project and has initiated the process required to obtain the necessary regulatory approvals.
In October 2005, First Gen signed a memorandum of understanding with Marubeni Corp. of Japan to pursue non-gas power projects.
Aside from Marubeni, BG Plc. will continue to be First Gen’s partner in these projects.
The partnership with Marubeni, he said, will explore a number of power generation opportunities, especially in geothermal and coal where Marubeni is already active in the Philippines.
He said First Gen is also looking at distributed power generation, including but not limited to co-generation facilities, for industrial and commercial establishments.
"We expect some projects to materialize in 2006," he said.
First Gen is the largest Filipino majority-owned and controlled independent power producer (IPP) in the Philippines, with installed capacity of 1,726.6 MW as of end-December 2005.
It operates the 1,000-MW Santa Rita gas power plant; 500-MW San Lorenzo gas plant; 225-MW diesel-fired Bauang Power Plant; 1.6-MW Agusan hydro-electric power plant.
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The Philippine Star
05/15/2006
Three new groups have expressed interest in becoming the third party in the development of the Camago-Malampaya Oil Leg (CMOL), an oil rim beneath the $4.5- billion Malampaya Deep Water Gas to Power project.
Energy undersecretary Guillermo Balce identified the new groups as Burgundy, Synergy and Black Gold.
Balce did not provide details on the identities of the new entities that have signified interest to join the CMOL but he said Burgundy is an asset management corporation and is a local firm.
The Department of Energy (DOE) early this month invited at least five foreign oil exploration firms to serve as a third party in the oil rim development.
One of these entities, if chosen, will undertake the re-appraisal, development and production of crude oil found beneath the Malampaya gas cap in offshore northwest Palawan.
The move is in line with the project’s terms of service issued by the DOE which allows PNOC to partner up with interested parties for the said activities.
Among the companies invited are Petronas, Nido Petroleum Phils. Pty. Ltd., and Forum Exploration, Inc. PNOC-Exploration Corp. (PNOC-EC), an oil exploration development arm of state-owned Philippine National Oil Co. (PNOC), intends to select its partners for the project not later than next month.
All these companies have, in the past, studied and reviewed the viability of producing the Malampaya oil reserves.
The selection by June this year is crucial as PNOC-EC, mandated by Malacañang, to take the lead in the oil rim development, is targeting first production of oil by end of next year.
The government has been eagerly pursuing the development of the CMOL to help reduce the country’s dependence on imported oil.
On Nov. 29, 2005, Malacañang issued Executive Order (EO) 473 which tasked the DOE to immediately develop and produce oil from the Camago-Malampaya reservoir.
The signing of an EO led to the signing of the terms of service between the DOE and PNOC on March 17, 2006.
On the same date, the DOE, PNOC and the Malampaya SC-38 consortium also inked a tripartite agreement to allow smooth coordination between the gas and oil projects and ensure the safe development of the oil rim and unhampered operations of the Malampaya DeepWater Gas Project which currently supplies natural gas to three large power plants in Batangas.
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Inq7.net
May 15, 2006
AS WORLD oil prices continued to escalate, oil firms again raised fuel prices by 50 centavos a liter and cooking gas prices by 50 centavos a kilogram.
Oil refiner Pilipinas Shell Petroleum Corp. led the price hike, raising gasoline, diesel and kerosene prices by 50 centavos a liter and liquefied petroleum gas (LPG) prices by 50 centavos a kg at 12:01 a.m. Sunday.
No. 1 player Petron Corp. and pure product importer Chevron Philippines Inc. increased prices of the same products by the same levels at 6 a.m. the same day.
New player Eastern Petroleum Corp. implemented a similar price increase at noon Sunday.
Flying V and Seaoil Petroleum Corp. increased prices at 12:01 a.m. Monday, followed by Unioil Petroleum Philippines Inc. and Total (Philippines) Corp. at 6 a.m.
According to data from the Department of Energy, the regional benchmark Dubai crude shot up to an average of 66.17 dollars a barrel as of May 11 from an April average of 64.14 dollars a barrel.
Since the start of the year, oil firms have hiked gasoline prices nine times by a total of 4.50 pesos a liter. Diesel and kerosene prices have risen 10 times by a total of 5 pesos a liter.
These new price adjustments bring premium unleaded gasoline prices to between 38.79 pesos and 40.26 pesos a liter, diesel to between 33.79 pesos and 35.42 pesos a liter, and kerosene to between P36.60 and P39 a liter.
LPG prices now range from 421.19 to 486.16 pesos per 11-kg cylinder.
All the prices are inclusive of the 12-percent value-added tax. Abigail L. Ho
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