PNOC-EDC expects turnover of CalEnergy project by June

PNOC-Energy Development Corp. (PNOC-EDC), the geothermal development arm of state-owned Philippine National Oil Co., expects the first turnover of a build-operate-transfer (BOT) project by June this year.

PNOC-EDC president Paul Aquino said California Energy (CalEn) will transfer the operations of the 125-megawatt (MW) Upper Mahiao power plant in Leyte.

Aquino assured PNOC-EDC is ready to take over the geothermal facility. "We expect a seamless transition with CalEn. We are confident we could run it smoothly. We have been undertaking critical preventive maintenance."

He said they are presently threshing out a few remaining issues including legal, inventory and performance testing.

"We will be able to complete the discussions to settle these remaining issues within this month or by April this year," he said.

According to Aquino, they would be able to initially absorb 35 percent of the manpower of the Upper Mahiao facility.

Under 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.

After Upper Mahiao, PNOC-EDC also expects the turnover of the 50-MW Mindanao II power plant by Marubeni Corp. in May 2009.

PNOC-EDC entered into geothermal steam business when it started the commercial steam operations in Tongonan, Leyte and Palinpinon I, Negros Oriental in January 1984.

The company started with P182.6 million gross steam sales in 1984 which improved starting 1989 when the National Power Corp. started paying under the take-or-pay scheme which enabled PNOC-EDC to recover costs equivalent to at least 75 percent of Napocor’s rated capacity.

The geothermal firm started selling electricity in July 1997 when its first power plant, built under the BOT scheme, started commercial operations.

Since then, the company’s revenues soared with full completion and operation of the BOT power plants in Leyte and Mindanao.

Starting 2003, gross revenues of the company hit the P20-billion mark. Electricity sales account for 76 percent of the firm’s total revenues while steam sales contribute 23 percent.

In fulfilling its mandate to explore additional geothermal prospects, the firm’s additional funding requirements up to 2009 will amount to P7 billion. Of this amount, some P2.9 billion will be used to fund the remaining payment requirements for the BOT contracts and additional working capital requirement.