The Philippine Star
06/01/2006
PNOC-Energy Development Corp. (PNOC-EDC), the geothermal and renewable energy arm of the state-run Philippine National Oil Co., is expecting a 21-percent increase in its net operating income this year with the first turnover of a build-operate-transfer (BOT) project next month, a top company official said.
PNOC president Eduardo Mañalac said PNOC-EDC’s net earnings from operations this year could reach P10.5 billion, from the 2005 level of P8.6 billion.
The ownership of the 125-megawatt (MW) Upper Mahiao geothermal power plant in Leyte, currently being managed and run by a consortium led by California Energy Inc., is expected to be transferred to PNOC-EDC this month.
Pursuant to Republic Act 7718, otherwise known as the Amended BOT Law of 1994, PNOC-EDC entered into 10-year energy conversion agreements, starting in 1996, to convert geothermal steam to electricity with CalEn, Ormat Inc., Oxbow Power Corp. and Marubeni Corp. for the construction and operation of six major power plants in Leyte and Mindanao, with a combined capacity of 685 MW.
The geothermal firm started selling electricity in July 1997 when its first power plant, built under the BOT scheme, started commercial operations.
The bulk of PNOC-EDC revenues are allotted for payments of BOT projects. Up to 2009, EDC would need to pay more than P2 billion worth of BOT contracts.
Mañalac noted that PNOC-EDC’s net operating income is almost flat compared to the first quarter of last year at P2.45 billion, which was attributed to the lower foreign gains for BOT obligations.
"We’re expecting hopefully that the revenues would also increase significantly by the second half of the year, as Upper Mahiao would be turned over some time this month. This turnover would result to lesser payments, and expectedly higher revenues as the electricity sales would go straight to our books," he said.
By the third quarter of 2006, Mañalac said PNOC-EDC will have a balloon payment for BOT contracts of about $40 to $50 million.
In the first quarter of the year, he said PNOC’s net operating income went down to P121 million from P129 million at the end of the first quarter in 2005.
The PNOC chief attributed the decline in the mother company’s operating income to the increase in expenses due to higher real estate taxes.
Another subsidiary of PNOC, PNOC-Exploration Corp.’s net income from operations for the first three months of 2006 increased substantially by 94 percent to P1.21 billion from P626 million in the same period last year.
Mañalac said the rise in PNOC-EC’s operating income was brought about by better revenues during the period.
For the first quarter of 2006, PNOC-EC’s revenues grew to P1.85 billion from P1.11 billion during the first quarter of last year.
The better revenue performance, he said, was due to the increase in dispatch of gas-fired plants of the National Power Corp. (Napocor).
PNOC-EC owns 10 percent of the $4.5-billion Malampaya deep water gas to power project which supplies the natural gas requirement of three gas-fired power plants the 1,500-megawatt (MW) Ilijan, 500-MW Sta. Rita and 1,000-MW San Lorenzo.
Mañalac noted that Napocor implemented a merit dispatch of its power plants which put natural gas-run power facilities on a priority list.
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The Philippine Star
06/01/2006
Petron Corp., the country’s largest oil company, launched yesterday the first non-toxic, biodegradable diesel engine cleaning technology in the market as part of its continuing efforts to promote a cleaner environment.
The new technology called "Carbon Flush" is a product of more than three years of continuing intense research and testing by Petron’s highly-qualified technical group.
"This is unique to the Philippines. We do hope that by launching this product, we also raise the awareness of our consumers with regard to the importance of keeping their vehicles properly maintained," Petron president and CEO Khalid Al-Faddagh said.
Al-Faddagh said the product is produced at Petron’s manufacturing plant in Pandacan.
The company has spent about P30 million for the research and development of various fuel-related technologies, including Carbon Flush.
Carbon Flush is injected into a running engine as a fine spray. The product then loosens engine deposits that are carried outside by exhaust gases. The engine can now take more air, providing optimum combustion efficiency and reduced exhaust emissions. It also has an added benefit of protecting engine parts by preventing the formation of carbon deposits.
In recent field tests, smoke emission of vehicles injected with Carbon Flush showed immediate visible improvement and a reduction of emissions by as much as 70 percent. More efficient combustion also resulted in fuel savings of nearly 10 percent.
The product could be applied in diesel engine at least once every three months by a qualified Petron personnel.
Carbon Flush will be initially available in 21 Petron service stations and will be offered to motorists free for two months. The product would then be offered at Petron retail stations in key cities at a low price of below P100.
The same technology, Al-Faddagh said, is expected to be developed for gasoline-run vehicles soon.
In 2002, Petron also pioneered in making automotive liquefied petroleum gas (LPG). At present, auto LPG is nearly P20 per liter cheaper than unleaded gasoline.
To date, more than 600 vehicles, mostly from taxi fleets, enjoy the benefit of Petron’s auto LPG brand- Xtend. About seven service stations in Metro Manila sell the Xtend product.
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The Philippine Star
06/01/2006
The government will earn over P1 billion once all contracts with distribution utilities on the sale of the sub-transmission assets (STAs) of the National Transmission Corp. (TransCo) are approved by the Energy Regulatory Commission (ERC), a ranking TransCo official said.
TransCo president Alan T. Ortiz said since 2004, TransCo has already sold five STAs. The sale contracts still need ERC approval before full payments are made.
So far, only one divestment contract, San Fernando Electric Light and Power Corp. (SFELAPCO), has been affirmed by the ERC.
Ortiz, however, believed that the approval of SFELAPCO’s contract would signal ERC’s commitment to approve the other contracts.
"This is a significant development and we thank ERC for being cognizant of the distribution utilities’ welfare. All the other distribution utilities that we have signed contracts with surely welcome this also," he said.
Ortiz also said the successful divestment of TransCo’s sub-transmission assets is a "win-win arrangement" for all.
"The transfer of ownership and control of these assets will enable distribution utilities to further expand their operations, serve more customers, and improve delivery of service. On the other hand, proceeds of the sale will be part of government revenues, and TransCo will be more focused on maintenance and expansion of transmission lines," he said.
Included in the contracts pending with the ERC are those with South Cotabato II Electric Cooperative (SOCOTECO II), Visayan Electric Co. (VECO), Negros Occidental Electric Cooperative (NOCECO), Cotabato Electric Cooperative (COTELCO), and SBMA/Subic Enerzone.
Signed on Jan. 7, 2004, the P12.92-million deal with SFELAPCO, was the first divestment contract between TransCo and a distribution utility.
The contract involves the sale of TransCo’s sub-transmission assets in the province of Pampanga particularly the Mexico-SFELPCO line, Mexico-SMC line, and Mexico-Elegant line, all rated at 69 kilovolts. The lines’ total length is 12.76 circuit-kilometers.
The divestment of TransCo’s sub-transmission assets is part of the energy industry reforms mandated by the Electric Power Industry Reform Act of 2001 (EPIRA).
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The Philippine Star
05/31/2006
The Energy Regulatory Commission (ERC) has approved a new dispatch protocol for Manila Electric Co. (Meralco)which will allow its independent power producers (IPPs) to run at contracted levels.
The ERC said the new dispatch scheme will replace the economic dispatch protocol (EDP) earlier imposed by the commission.
The ERC order recognized Meralco’s and the National Power Corp.’s arguments contained in their respective motion for reconsideration filed last Feb. 9, 2006 that the previous dispatch system under EDP is "counter-productive".
"After a diligent review of the arguments of both parties in this case, there is concrete showing that despite earnest efforts at arriving at a solution to the dispute relative to the execution of the TSC (transition supply contract) between Napocor and Meralco by way of the implementation of the EDP and other solutions station in the Nov. 7, 2005 and Dec. 15, 2005, decision and order, respectively, these did not afford both parties the best resolution to the problem," the ERC said.
The EDP should have become the basis for a TSC between Napocor and Meralco as provided for under Sec. 67 of Republic Act 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA).
The TSC is designed to allow the new buyers of the generation assets of Napocor a ready market once it is privatized. Most of the potential investors of Napocor’s privatization have indicated that they would prefer to buy a generation company with TSC. Under the EPIRA, the TSCs shall be assignable to the Napocor successor generation companies.
Aside from allowing Meralco’s IPPs to run at contracted volumes or at minimum energy quantity (MEQ), the ERC said Napocor "shall supply the balance of Meralco’s energy requirements and less any volume supplied by privatized generation assets of the state-run power generation company under the ERC approved power purchase agreement."
Meralco has claimed that if its IPPs would be run at MEQ or at 83-85 percent, its customers could enjoy a 37-centavo per kilowatthour (kWh) savings in their electricity rates.
Meralco’s IPPs include First Gen Corp.’s Sta. Rita and San Lorenzo power plants, Quezon Power Phils. Ltd. and Duracom Power.
The ERC said the new dispatch rule would also result in an efficient provision of electric power to Meralco’s captive market.
The country’s power sector regulator said this manner of dispatch shall take effect immediately and shall be effective until otherwise modified by the commission.
With this new dispatch arrangement, the ERC has also temporarily suspended the deadline for the power firms to execute a TSC which was supposed to be on April 25 this year.
"Accordingly, the requirement for Napocor and Meralco to execute a TSC by the deadline given is hereby held in abeyance," the ERC said.
But the ERC pointed out that newly-approved dispatch system should "not prevent Meralco from taking lower cost electricity from privatized ex-Napocor generation sources that will benefit Meralco’s end-users."
Napocor and Meralco were supposed to submit their duly executed TSC on or before Jan. 20, 2006 but they sought a three-month extension due to unresolved differences on the level or volume of dispatch.
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The Philippine Star
05/31/2006
After divesting most of its power generation business more than three decades ago, Manila Electric Co. (Meralco) has revived interest to bid for the generating assets of the National Power Corp. (Napocor).
Meralco chairman and chief executive officer Manuel Lopez told a press conference yesterday that the power firm’s board has seen "the attractiveness of the power generation (business)".
"This is something that our board decided upon. We are looking at various options. We may go into greenfield projects or look at the assets of Napocor, particularly geothermal," Lopez said.
Lopez pointed out that this endeavor will be made separately from its affiliates First Gas Corp. and First Gen Corp., which are also bidding for Napocor assets.
"Meralco is charting it on an independent course," he said, noting that Meralco has a different set of shareholders.
Meralco president Jesus Francisco, on the other hand, said they would use subsidiary Meralco Energy Inc. (MEI) as an investment vehicle for this purpose.
Last year, MEI gave up its electric facilities management business and shifted its strategy to focus on energy services business and look for opportunities created by the electricity industry deregulation.
Since then, MEI has been entrusted by Meralco’s power supply management committee to evaluate the possible acquisition of some generating assets being privatized by the Power Sector Assets and Liabilities Management Corp. (PSALM), a government arm which handles the privatization of Napocor assets.
According to Francisco, MEI submitted and bought the bidding documents from PSALM to be able to participate in the bidding for the 700.73-megawatt (MW) Tiwi-Makban geothermal complex, 360-MW Magat hydro complex and 112-MW Pantabangan-Masiway hydro complex.
Meralco expects the completion of the bidding processes for these assets before the end of this year.
MEI is also considering becoming a retail electricity supplier (RES) that would sell electricity to the contestable market once retail competition starts.
It is now studying the rules and the economics pertaining to buying and selling of power as promulgated by the Electric Power Industry Reform Act of 2001.
Meralco is into indirect power generation business through one of its subsidiaries – First Private Power Corp. (FPPC)-which has an investment in Bauang Private Power Corp.
As of end-2005, Meralco has P164.34 billion worth of assets. It serves some 4.3 million customers.
Todate, the company has a total outstanding loan of P15 billion which will be paid in seven years. So far, the company has to set aside some P2 billion every year to settle these outstanding loans.
Meralco executive vice president and chief finance officer Daniel Tagaza said some of these loans are being paid on quarterly and semi-annual basis.
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The Philippine Star
05/30/2006
Energy Secretary Raphael Lotilla has expressed optimism that investment opportunities between the Philippines and Middle Eastern countries will be enhanced in the near future.
Lotilla was part of the Philippine economic team that went to Qatar last week for the Asia Cooperation Dialogue (ACD). The ACD consists of oil exporting countries Bahrain, Brunei, Indonesia, Kazakhstan, Kuwait, Malaysia, Oman and Qatar and oil importing countries Bangladesh, Cambodia, China, India, Japan, Lao P.D.R., Myanmar, Pakistan, the Philippines, Singapore, South Korea, Sri-Lanka, Thailand and Vietnam.
Conceptualized in 2002 by the Thai government, the ACD is aimed at promoting and improving relationships among Asian countries in all areas of cooperation to help reduce poverty and improve the quality of life for the Asian people.
Lotilla said one of the issues discussed in the ACD was the re-channeling of Petrodollar investments from the Middle East to developing countries in Asia including the Philippines.
Petrodollars refer to the money that Middle Eastern countries and members of OPEC receive as revenue from Western nations, which are eventually deposited banks.
"One of the things that we have been developing, which if you recall was a major thing in President Arroyo’s trip to Saudi Arabia, was how to re-channel or reinvest the petrodollars into Asian economies. I think that’s a very important point because right now, due to the higher price of oil, we are experiencing the same phenomenon that occurred in the 70s, where you have petrodollars floating out there and of course they would have to find some place to be invested in," he said.
He said this time the Philippines should learn its lessons from the past. "In the 70s, they invested them through American banks and then these banks re-lent them sometimes irresponsibly to developing countries like the Philippines, which gave rise to the debt crisis in the 80s. The oil producing countries have actually far greater alternatives on how to invest their money now than in the 70s, because there are things they can invest in," he said.
Lotilla said among the proposals discussed was the development of Asian bonds, which can absorb some of the excess petrodollars and the proceeds can be used by Asian economies for their development projects.
Details of such proposal, Lotilla said, will have to be addressed and handled by the Department of Finance (DOF). "But at that level, the official position of the Philippines is that we support such kind of alternative."
He noted that a dilemma of oil producing countries in Asia is to identify appropriate vehicles for their investments. "I guess they’re not in a position to be able to identify specific projects - that’s a role for the private sector and that’s why we need to encourage greater interaction between the public and private sector in the oil producing countries."
"I think that was a major decision was made that in the subsequent activities of the ACD was that there should be appropriate business sector representation, as they are the ones that are going to make these things work."
According to Lotilla, they have also pointed out to Saudi officials the important role of Filipino workers in their economy.
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The Philippine Star
05/30/2006
The Spot Market Division (SMD) of the Energy Regulatory Commission (ERC) has concluded their intensive training and capacity building in preparation for the operation of the wholesale electricity spot market (WESM), a top ERC official said.
ERC chairman Rodolfo Albano Jr. said the three-phased training assistance (TA) granted by the UK government was intended to enhance the technical capability of the SMD in regulating the WESM.
The TA was made possible through the Foreign and Commonwealth Office‚s Global Opportunities Fund for Economic Governance.
Albano lauded the UK government, for helping the ERC attain technical competence in the regulation of the WESM. EA Technology and consultants Andrew Jackson and John Bennet shared their technical expertise and experience to the SMD staff.
The first phase of the TA conducted in Feb. 2006 was a series of market monitoring discussions involving the experiences of other electricity markets in the evolution and implementation of market monitoring processes around the world.
This was followed by the installation of and initial walk-through on the NEO software, a powerful data analysis and visualization tool specifically developed to handle complex data from multiple sources in real time.
The NEO will serve as the core analysis tool for the ERC. The last phase of the TA was an intensive hands-on training and workshop on the NEO software.
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Manila Electric Co. (Meralco) said on Tuesday a profitable April might signal the start of a turnaround in the fortunes of the Philippines' largest power distributor, after two years of losses.
Meralco Chairman Manuel Lopez told investors the company generated net income of about 300 million pesos (5.7 million dollars) in April after a net loss of 748 million pesos in the 2006 first quarter.
"I think this might be the start of a possible turnaround," Lopez said.
Meralco, which supplies power to about four million homes and businesses in Manila and six nearby provinces, has said it expected its sales volume to grow 2.8 percent this year from a mere 0.6 percent growth in 2005 as new malls open.
The group generated a net loss in 2005 of 350 million pesos from losses of 1.88 billion pesos in 2004.
Meralco said it would have made a profit last year if it had not covered for probable losses arising from a court case and new accounting rules.
The firm is owned by the government, conglomerate First Philippine Holdings Corp., controlled by the Lopez family, and the local unit of Spanish Union Fenosa SA
At 0250 GMT, Meralco B shares, available to foreigners, were up 1.19 percent at 21.25 pesos. Locally held Meralco A shares were flat at 13.50 pesos. Manila's main stock index was 0.07 percent higher at 2,284.45 points.
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The Philippine Star
05/29/2006
The Philippine Sugar Millers Association (PSMA) is urging the swift passage of the biofuels bill that is now pending at the Senate to accelerate the development of the ethanol industry.
"The immediate passage of the biofuels bill will enable the agriculture sector to hedge on its competitive advantages by taking advantage of agricultural products as efficient energy crops by developing expertise and adapting technological advances," said Jose Maria Zabaleta, executive director of the PSMA in a recent Business Forum sponsored by the Economic Journalists Association of the Philippines (EJAP).
The biofuels bill mandates the blending of five-percent ethanol to gasoline within two years after the approval of the bill and increasing the ethanol blend to 10 percent upon the creation of the National Biofuels Board which will regulate the ethanol industry.
Zabaleta said approval of the biofuels bill opens up new opportunities for the sugar sector. It will require new investments in ethanol plants and distilleries as well as investments in the expansion of new sugarcane hectarage.
"A five-percent ethanol blend requires 160.67 million litters of ethanol.It will take 10 years to get to this level of production. Specific ethanol projects for one, will require new cane areas," he said, adding that by 2012 when the mandated ethanol blend is at 10 percent, the country will need an estimated 428.04 million liters of ethanol.
The Philippine sugar industry which currently caters mostly to the local food and beverage sector and the US sugar export quota, will have to open up new cane areas for ethanol production.
Zabaleta said that since sugar is the most preferred feedstock for ethanol production, it will not be difficult to provide sugarcane for ethanol use but existing sugar mills and refineries located in traditional sugar districts in the country such as Negros Occidental cannot accommodate the bigger demand.
"Specific projects for fuel ethanol production will require the opening of new cane areas in Northern Luzon, Mindoro and Southern Mindanao."
Some of the identified possible areas for sugarcane-for-ethanol production include Kalinga, Cagayan, Isabela, Masbate, Palawan in Luzon, Bohol in Visayas, and Agusan del Norte, Agusan del Sur, Lanao del Norte, Maguindanao, South Cotabato and Saranggani in Mindanao.
Zabaleta pointed out that the quick passage of the biofuels bill will keep the Philippines in step with the ongoing worldwide shift to cheaper biofuel production for fuel and energy use as crude oil prices continue to soar.
The US for instance is increasing its corn production which is used as feedstock for ethanol, Thailand is using cassava while Brazil, Mexico and Australia are also raising sugarcane production to feed the energy market.
Aside from the sugar sector, Zabaleta said there are other possible feedstock for ethanol such as sweet sorghum, cassava, corn and sweet potatoes.
"So within the agriculture sector, there is an opportunity for product diversification that could increase farmers’ income and stabilize market prices in cases of surplus production."
Investors are waiting for the biofuels bill passage and are closely watching what fiscal incentives and perks companies investing in the ethanol industry will get.
There are several distillery companies that are willing to convert their excess capacities and put up facilities such as $500,000-dehydrators that would enable them to produce anhydrous alcohol or ethanol that would be pre-blended with gasoline.
Zabaleta said once the bill is enacted, the Philippines has the potential to become a major producer of alternative fuels. Bukidnon Rep. Miguel Zubiri said there are several ethanol plants that are in various stages of construction in anticipation of the enactment of the ethanol bill.
He said the group of British firm Bronzeoak Phils. and Bukidnon Sugar Milling Corp. (BUSCO) are putting up a fuel ethanol plant in Bukidnon province in the next three years.
Zubiri said the two groups are conducting feasibility studies for the possibility of establishing ethanol plants in Bukinon. A plant with a 25-MW capacity requires an investment of at least P1.5 billion.
Bronzeoak Phils. is involved in the ethanol facility in San Carlos, Negros Occidental. Bronzeoak is the joint venture partner of the National Development Co. (NDC).
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The Philippine Star
05/29/2006
The board of the Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC) has approved the planned sale of the company’s 30 to 40 percent shares through an initial public offering (IPO) this September.
PNOC president Eduardo Mañalac said the PNOC-EDC board has decided to list the entire 30 to 40 percent stake of the geothermal arm of the PNOC group in the Philippine Stock Exchange (PSE).
Mañalac said the board of the mother company, PNOC, is set to approve the plan.
After the PNOC board approval, he said they would forward the proposed privatization blueprint to the Privatization Council for the final approval.
"Hopefully by next week we have all these approvals that would allow us to proceed to the next stage," he said.
Portion of the proceeds from the sale is expected to cover for loan payments of PNOC-EDC which will fall due in the latter part of the year.
"The intent or hope is to complete the IPO by September. Part of the proceeds would be used to pay the bullet payments," he said.
"CLSA (PNOC-EDC privatization financial advisor) expects that there would be foreign capital infusion as well. We would be having roadshows," he said.
According to Mañalac, they have already secured conformational resolution from the Joint Congressional Power Commission (JCPC).
"It’s more or less settled already, that the package would involve only the power plant and a negotiated long-term steam sale," he said.
The PNOC-EDC’s privatization was stalled by the issue of whether the geothermal assets of the National Power Corp. (Napocor), under the Electric Power Industry Reform Act of 2001 or Republic Act 9136, should be sold with the steamfields which are being run by the PNOC-EDC.
Based on the approved resolution of the JCPC, the geothermal assets would just be sold with a steam supply agreement (SSA).
Under the earlier privatization blueprint being proposed by the CLSA, PNOC-EDC will follow the model of Petron Corp., another subsidiary of PNOC.
Based on the Petron privatization model, some 40 percent of the company was sold to a strategic partner (Saudi Arabian Co.), 20 percent through IPO and the remaining 40 percent was retained by PNOC.
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The Philippine Star
05/29/2006
The Power Sector Assets and Liabilities Management Corp. (PSALM) will finally auction off the concession agreement for the National Transmission Corp. (TransCo) assets this September.
In firming up the privatization schedule for TransCo, PSALM has also set the requirements for the interested bidders.
PSALM said investor groups interested in bidding for the 25-year concession of TransCo must have a member or affiliate who can meet the technical prequalification criteria.
According to PSALM, this member or affiliate must have a net asset value or market capitalization of $500 million.
To be able to bid for TransCo, PSALM said prospective bidders must have a member or affiliate with sufficient experience in operating and maintaining electricity transmission systems comparable to that of the Philippines, with at least 6,000 circuit kilometers and a minimum 5,000 megawatts peak demand and a voltage level of 115 kilovolts (kV) to 230 kV.
PSALM said it would now start accepting expressions of interest from interested parties until mid-July 2006.
Qualified bidders, PSALM said, will then be given ample time to conduct their due diligence.
The power asset disposal firm said the transaction documents for the forthcoming bidding are now available.
In compliance with the 60 percent-40 percent equity rule on ownership of local entities, foreign investors who will bid for TransCo must have a net asset value or market capitalization of at least $175 million. Their Filipino partners, on the other hand, must have $300 million.
"The $500-million market capitalization was set to optimize the TransCo assets and to ensure the earnestness of investors interested in bidding for the transmission company, including its operation and maintenance," PSALM president Nieves L. Osorio said.
As specified in the Electric Power Industry Reform Act (EPIRA), the TransCo bidders should not have any interest in the electricity generation, distribution or supply sector, whether held directly or indirectly.
Osorio said only bidders who pass the prequalification phase would be allowed to submit bids.
The forthcoming bidding is the third attempt to privatize TransCo after two failures in 2003.
"This time, PSALM firmly believes that the chances of success for the privatization of the transmission company are greater primarily because of a number of significant developments that have occurred after the first bid attempt," Osorio said.
The PSALM chief said there is greater visibility and certainty on the critical regulatory framework, particularly after the Final Determination of TransCo’s regulated asset base (RAB) is released by the Energy Regulatory Commission (ERC) in June 16, 2006.
The RAB will be the basis for TransCo’s annual maximum allowable revenue (MAR) which, in turn, will determine the transmission wheeling rates. The wheeling charges are the main source of revenue for the TransCo concessionaire.
The transmission rates were first set by the ERC in 2003, the start of the first regulatory period. The second regulatory period starts this year, after which a reset will be made every five years.
Prior to the start of the five-year regulatory period, the ERC would determine the concessionaire’s annual revenue requirement based on its projected operating and maintenance expenses, estimated tax payments, regulatory depreciation charges on assets used, and investors’ return on capital.
Osorio noted an improved investor interest in TransCo based on the results of an informal pre-marketing survey that the corporation recently conducted. "Several parties have already expressed interest in bidding for the TransCo concession," she said.
In the privatization structure agreed upon by the PSALM Board, TransCo will be privatized through a 25-year concession contract that may be extended to another 25 years depending on the results of the review of the concessionaire’s performance.
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Inq7
May 28, 2006
FOLLOWING the lead of the country's two oil refiners, oil firms raised gasoline and kerosene prices by 0.50 peso a liter.
Chevron Philippines Corp. hiked its gasoline and kerosene prices by 0.50 peso a liter at 6 a.m. on Sunday, while Total (Philippines) Corp. will increase its prices at 12:01 a.m. on Monday.
The two oil firms also adjusted liquefied petroleum gas prices by 0.56 peso per kilogram, inclusive of the 12-percent value-added tax.
New oil player Seaoil Petroleum Corp. will jack up gasoline and kerosene prices at 12:01 a.m. on Monday. Unioil Petroleum Philippines Inc. will follow suit at 6 a.m.
Petron Corp. and Pilipinas Shell Petroleum Corp., retained prices of diesel, in an effort to help the public transport sector.
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Manila Bulletin
may 28, 2006
Negotiations are being set in motion with two European firms on a possible farm-in deal for the West Balabac oil and gas block currently under full operatorship of the Philippine National Oil Company.
The West Balabac acreage which is under Service Contract 59 is within South China Sea; and is seen to add up to the country’s energy reserves if eventually proven commercially viable.
The European firms targetted as partners are Lundin Oil and Tap Oil, which both counts involvement in oil and gas exploration ventures.
"West Balabac is 100 percent operated by PNOC, again there are a couple of companies we are talking to, particularly European companies Lundin Oil and Tap Oil, for a potential farm-in agreement," divulged PNOC President Eduardo V. Mañalac.
He added that these interested parties are now looking at the data, and "were at the early stages of discussions with these firms."
Mañalac stressed the company has been shifting attention to Palawan and South China Sea areas when it comes to its upstream ventures with indications that these prospects will have higher success rates.
In the last two years, he noted that the company has jacked up its acreage holdings by 270 percent to 73,000 square kilometers from 27,000 sq km.
The PNOC chief executive further pointed out their main concern is achieving higher success rate in exploration and drilling ventures through the use of latest technology and application of expertise.
One of the major upstream undertakings of the company is a prospective drilling within a disputed area in the South China.
A joint marine seismic undertaking was already carried out with China National Offshore Oil Corporation (CNOOC), and lately with the involvement of PetroVietnam, as a way of assessing oil and gas reserves in the targeted acreage.
The agreement covers a three year joint research of the petroleum resource potential in certain areas of the South China Sea.
The companies agreed to equally share the to million investment cost for the project. It covers a pre-exploration study solely to collect, process and analyze seismic data; and no drilling or development is covered yet under the study phase.
Manalac noted that the venture would put a lot of meaning on goals of attaining regional collaboration from among member-countries of the Association of Southeast Asian Nations (Asean); with all parties being considered as a ‘potential partner’; especially if the project reaches commercial development. (MMV)
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The Philippine Star
05/28/2006
The Energy Regulatory Commission (ERC) is inviting regulatory experts for the review of the expenditure forecasts of privately-owned electricity distribution utilities (DUs) that would use the so-called performance-based regulation (PBR) methodology.
PBR, an internationally-accepted rate setting methodology, is an alternative to the return-on-rate-base (RORB) methodology currently being used by DUs in gauging their returns.
As suggested in the distribution wheeling rate guidelines (DWRG), PBR employs incentives to induce cost-cutting that will result in better electricity rates, encourage improvement and efficiency in service delivery and optimal use of assets, and provide more rational allocation of risks and rewards.
ERC, the country’s power sector watchdog, recently promulgated a PBR for DUs, of which participating utilities will be subject to a price cap for the delivery of distribution wheeling services.
The reset process for the setting of the price cap that will apply from July 1, 2007 to June 30, 2011 is currently underway.
The ERC said an important requirement of the reset process is the review of the expenditure forecasts submitted by DUs as part of the rate-setting process under PBR.
These expenditure components, the ERC said, are critical to the determination of the revenue to which DUs are entitled on which price caps will be based.
The ERC said it will require assistance from regulatory experts in its review of the expenditure forecasts for the said period.
The forecasts will be for the following expenditure categories: capital expenditure; disposal of fixed assets; operating and maintenance expenditure; and taxes (other than corporate income tax), levies and duties and expenditure.
So far, three DUs have opted to take part in the PBR, and the expenditure forecasts for each of these will be reviewed. These DUs are Cagayan de Oro Electric Power & Light Co. Inc. (Cepalco); Dagupan Electric Corp. (Decorp); and Manila Electric Co. (Meralco).
The experts that would be selected by the ERC would be tasked to come up with the analyses of the expenditure forecasts for each DU; assessment of these expenditure forecasts and recommendation about how they should be modified, if required; and preparation and presentation to the ERC of a detailed report in which the expert’s finding are presented.
The experts are also expected to assist in explaining and defending the approved expenditure forecasts during the public hearing process that will follow rate applications by DUs under the regulatory reset process and the publication of the ERC’s draft determination; and come up with documentation of all the functions performed in evaluating the date provided and of the reasons for coming up with the recommendations, including full details of the changes recommended to the utility expenditure programs.
Interested parties are required to submit their respective expression of interest on June 2, 2006. In terms of reset process, the ERC has to make its draft determination on the price caps for distribution wheeling rates by Feb. 16, 2007 and the final determination by May 31, 2007.
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