First Gas, BG plc to invest $1-B in natural gas

The Lopez-controlled First Gas Holdings Corp. (FGHC) and BG plc (formerly British Gas) are joining forces to put up a total of $1 billion worth of investment in the next 10 years for the development of the downstream natural gas supply business.

In a press briefing yesterday, First Gas president Peter Garrucho said the bulk of the project cost would be financed through loans from various local and foreign financial institutions. First Gas is 60 percent-owned by First Generation Holdings Corp. and 40 percent by BG plc.

"About 75 percent of the $1 billion would be raised through loans and the remaining 25 percent through equity," Garrucho said.

Of the $1 billion, about $500 million will be used to bid and rehabilitate the Sucat power plant. The existence of a power plant, he said, would warrant the construction of a gas pipeline.

He said a natural gas pipeline from Batangas to a power plant located in or near Metro Manila (Sucat Power plant) is envisioned by the two companies to become the backbone of the natural gas distribution system. "We are targetting to win Sucat and we will bid aggressively for it," he said.

The 400-MW Sucat power plant, an oil-based power facility owned by the National Power Corp. (Napocor), is currently on a stand-by mode and is turned on only when the need arises.

But, he said in case they do not win in the bidding for Sucat power plant, they could consider building a new power plant near the Metro Manila area.

He said they expect to spend around $100 million for a 100-kilometer gas pipeline from Batangas to Sucat.

The FGHC official said they would need another $400 million for the subsequent development projects.