First Gas awarded $11.2M in contract dispute with Siemens

First Gas Power Corp. (FGPC), a subsidiary of the Lopez-owned First Generation Holdings Corp., announced Thursday another positive development in its arbitration proceedings with Siemens due to contract differences.

In a disclosure to the Philippine Stock Exchange, First Gen said the Arbitral Tribunal issued its third interim ruling and awarded FGPC $11.2 million (including the $5-million balance of liquidated damages payable pursuant to the second interim award), and Siemens $8.5 million, respectively.

"We are delighted that FGPC has received positive awards from the Arbitral Tribunal, which have affirmed that FGPC was not responsible for the delays which occurred during the construction of the Santa Rita power plant in 1999 and 2000," First Gen vice chairman Peter Garrucho Jr. said.

Garrucho said the arbitration has taken up a considerable amount of management time thus "we now look forward to putting this matter behind us, and to intensify our focus on the development of new projects and hope that, as a company, we can renew our ties with Siemens."

FGPC in November 2005 received a positive development in arbitration proceedings originated by Siemens concerning the allocation of responsibility, and payment of damages, arising from the delay in the completion of the Santa Rita plant.

The Arbitral Tribunal published its second interim award and ruled that FGPC was entitled to the full amount of liquidated damages due to delays in the aggregate amount of $99.3 million – of which sum FGPC had already withheld $94.3 million from interim payments that would otherwise have been due to Siemens.

The awards given by the tribunal are exclusive of interest and yet to be calculated. These will be dealt with in a future award if not previously agreed upon.

After adjustments are made to the amounts awarded to each party to account for interest, FGPC anticipates that a net cash balance will still be payable by Siemens to FGPC; and FGPC will remain entitled to retain all of the $94.3 million previously withheld from Siemens. The amounts involved will likely result in prepayment of loans as required under FGPC’s financing documents.

The tribunal will determine the remaining issues (principally relating to the costs of the proceedings, and any unresolved issues concerning interest) in a final award which is expected to be published later in 2006.