The Philippine Star 11/17/2006
In a disclosure to the Philippine Stock Exchange, First Gen vice chairman and CEO Peter Garrucho Jr. said the improvement in earnings could be attributed to lower professional fees with the conclusion of the Santa Rita plant’s dispute with its contractor Siemens.
Garrucho said the favorable settlement of the dispute with the Malampaya consortium, lower administrative expenses, and lower net interest expense also helped in posting improved earnings for the said period.
According to the First Gen official, the positive outcome of Santa Rita’s arbitration case with Siemens and the dispute with the gas sellers generated millions in savings from professional fees alone.
He noted that First Gen’s administrative expenses went down by $8 million from the same period last year.
Net interest expense was also lower by $4 million due to higher interest income earned from its robust cash position.
"We are pleased that Sta. Rita and San Lorenzo have finally settled their long-standing disputes resulting in substantial benefits to the company. With these developments, our gas plants will provide strong platforms for First Gen’s growth aspirations," Garrucho said.
First Gen’s consolidated revenues rose to $725 million, up by 19 percent. The increase was primarily due to improved dispatch and higher fuel prices.
Dispatch was significantly higher for San Lorenzo at an average of 80 percent as of September 2006 compared to 77 percent in September 2005.
Garrucho said this was a result of the operation of the wholesale electricity spot market (WESM), which commenced in June this year.
Sta. Rita registered almost the same dispatch in comparison with the same period last year due to scheduled plant outages.
First Gen operates principally through its power plants Sta. Rita and San Lorenzo in Batangas, Bauang in La Union and Agusan in Bukidnon.
Last Sept. 6, 2006, it successfully bid for the 112 megawatt Pantabangan/Masiway hydroelectric power complex which will be turned over by Power Sector Assets and Liabilities Management Corp.
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The Philippine Star 11/17/2006
The major multilateral creditors of the National Power Corp. (Napocor) have approved the transfer of the 112-megawatt Pantabangan-Masiway hydroelectric power plant to its new owner, First Gen Hydro Power Corp. (FGHPC), a ranking energy official said.
Power Sector Assets and Liabilities Management Corp. (PSALM) president Nieves Osorio said the consent of the creditors is a crucial component in completing the sale process.
Osorio said the Asian Development Bank, the World Bank and the Japan Bank for International Cooperation gave their individual consents to the sale and transfer of the power facility, which was bid out last Sept. 8 and won by FGHPC with an offer of $129 million.
PSALM is a government entity tasked to oversee the privatization of Napocor’s assets.
According to Osorio, FGHPC has also delivered its certificate of closing and documentary deliverables and has posted a performance bond of $2.58 million, which is equivalent to two percent of the purchase price.
The completion of the closing deliverables by both parties paves the way for the turnover of the Nueva Ecija-based power facility.
"The turnover of the Pantabangan-Masiway hydroelectric power plant complex to FGHPC marks another milestone in the ongoing privatization efforts of the government to fasttrack the restructuring and privatization of the country’s electric power industry," Osorio said.
The operational turnover of the 100-MW Pantabangan and 12-MW Masiway hydro power plants will be held at the Pantabangan plant site in Pantabangan, Nueva Ecija.
Under the asset purchase agreement (APA) executed between PSALM and FGHPC, PSALM as the "seller" is required to submit to FGHPC, the "buyer," the certificate of closing and deliverables to complete the transaction.
PSALM has complied with all the conditions stipulated in the APA, the primary requisite for closing the contract. Specifically, the consents and proceedings allowing the transfer of the purchased assets, as specified in the APA, from the Napocor to PSALM and from PSALM to FGHPC have been secured and completed.
PSALM has likewise delivered to FGHPC its closing deliverables. These include the certificate of closing, the certificate of the seller’s representations and warranties as of the closing date, and a transmittal of deliverables acknowledged before a person authorized to administer oaths.
"Let us give credit to the Napocor plant personnel whose diligence in operating and maintaining the Pantabangan-Masiway facility allowed the government to seek the optimum value of the power plant," Osorio said.
"We would also like to thank the National Irrigation Administration for its cooperation and support in forging the pperation and maintenance agreement for the non-power component to ensure the continued safe and reliable operation of the dam, reservoir and other structures," she added.
Osorio also lauded the Department of Environment and Natural Resources and the Protected Area Management Board (PAMB) for allowing PSALM to continue administering the Masiway land through a Memorandum of Agreement signed between PSALM and the PAMB for purposes of power generation.
PSALM, under the terms of the APA, can now require FGHPC to deliver at least 40 percent of the purchase price as upfront payment payable on or before the closing date. The balance of 60 percent may be paid in 14 equal semi-annual payments with an interest of 12 percent per annum compounded semi-annually. FGHPC will also be required to post a deferred payment security deposit.
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The Philippine Star 11/17/2006
The management and employees of Mirant Philippines Corp. will face off for a conciliatory meeting at the Department of Labor and Employment (DOLE) on Friday.
In a press statement, Mirant employees said a prior meeting was called by DOLE director Reynaldo Ubaldo last Monday to resolve the issues between them and the company’s management before Mirant’s assets in the country are eventually sold.
Mirant Philippines is set to be auctioned off to at least four bidders by Nov. 17 this year.
Some 1,200 employees of Mirant Philippines had sought Labor Secretary Arturo Brion’s help in mediating to avert a possible labor dispute that may disrupt plant operations.
Due to management’s failure to send a representative last Monday, the DOLE, through a notification letter signed by Undersecretary Luzviminda Padilla, reset the meeting between management and the employees to Nov. 17.
In a statement, Mirant’s management said it begged off from the proposed meeting last Monday, citing conflict in schedule and pointed out that it would attend instead its pre-set meeting with the National Conciliation and Mediation Board on Friday.
It stressed that the NCMB mediation process is voluntary. "That fact that we are actively participating in it shows our desire to help those employees involved understand our position. We are cooperating because we believe we must clarify certain matters and set them to rest once and for all," the statement said.
Mirant employees reiterated their position that all 1,200 workers be paid out separation packages, upon sale of the Philippine assets, in accordance with company policy.
According to the employees, this is to protect their years of service to the company and give the new owners the option start from a clean slate with employees who they intend to rehire. Those who will not be rehired will, at least, have their years of service protected by severance payments.
"Employees will only pull the case out of DOLE and agree to an amicable settlement if management agrees to pay separation packages to all employees upon the sale. That is the bottom line," a company source said.
The source added that employees are willing to sign a transition agreement if paid a severance package to ensure a smooth turn-over and non disruption of plant operations.
The sale of Mirant Philippines is expected to fetch close to $3 billion for its parent company, Atlanta-based Mirant Corp.
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The Philippine Star 11/16/2006
Prominent businessmen Ramon Ang of San Miguel Corp., Henry Sy Sr. of the SM Group and Joselito Campos of Unilab are teaming up for the bidding of the National Transmission Corp. (TransCo), the Power Sector Assets and Liabilities Management Corp. (PSALM) said yesterday.
In a letter to the Joint Congressional Power Commission (JCPC), PSALM said the group forms part of a consortium that was among those pre-qualified to join the TransCo bidding on Dec. 20.
PSALM said the businessmen will control the consortium through Triratna Holdings Corp. with a 60-percent stake. Its partners are Tenaga Nasional Berhad (five percent) and Newbridge Asia IV L.P. (35 percent).
Tenaga Nasional is a state-owned Malaysian power company which is one of the first entities that have signified interest in TransCo some years back, while Newbridge is a US-based investment group.
A second consortium eyeing TransCo, is composed of Citadel Holdings Inc. (60 percent) and Terna SPA (40 percent). The group is represented by Rogelio Singson.
Citadel is the investment vehicle of Delgado family, engaged in exports, logistics and transportation while Terna SPA is one of the biggest power companies in Italy involved in the production and transmission of electricity for domestic and industrial use.
The last pre-qualified group consists of Monte Oro Grid Resources Corp. (60 percent) and State Grid Corp. of China (40 percent). Monte Oro is represented by Walter B. Brown. State Grid is the largest transmission firm in China while Brown is the chairman Philex Mining Corp.
PSALM named the three bidders for the country’s sole transmission arm after completing the evaluation of their respective prequalification proposals submitted last Sept. 28.
The prequalification group composed of PSALM and TransCo technical teams conducted the evaluation based on stringent technical and financial criteria that each group adequately met.
"Our financial criteria ensure that the technical partner, the prequalifying Filipino investor and foreign investor are all financially healthy," PSALM president Nieves L. Osorio said.
The three bidders for the TransCo concession must have a member or affiliate with experience in operating and maintaining electricity transmission systems comparable to that of the Philippines, with at least 6,000 circuit kilometers, a minimum 6,000 megawatts peak demand and a voltage level of 115 kilovolts (kv) to 230 kv.
At the same time, the member of the prospective bidder who meets the technical prequalification criteria must have a net asset value or market capitalization of at least $500 million.
The Filipino investor must have a net asset value or market capitalization of at least $300 million, or must be able to present a bank opinion that the Filipino group can fund equity investment of not less than $300 million.
The foreign investor must have a net asset value of at least $175 million, or present a bank opinion that it can fund equity investment of not less than $175 million.
The prequalification process is the second stage of the entire bidding procedure for the TransCo concession. In this phase, the prospective bidders submit their proposals to PSALM for review and validation.
Osorio said this is to ensure that only serious bidders with proven domestic or international experience and expertise as a leading transmission system operator will be qualified to participate in the formal bidding.
The TransCo privatization process officially started on May 28 with the publication of the invitation to express interest, prequalify and bid. The pre-bid conference will be held on Nov.20 to give prospective bidders the opportunity to clarify issues and concerns.
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