PSE okays P15-B IPO of PNOC geothermal unit

The Philippine Stock Exchange (PSE) has approved the listing of the geothermal arm of state-run Philippine National Oil Co. (PNOC) to usher in the second-biggest initial public offering (IPO) in the local stock market. PNOC-Energy Development Corp. (EDC) will sell 30 to 40 percent of its outstanding shares through the maiden offering of shares to the public estimated to raise around P15 billion.

CLSA Exchange Capital is the sole book and international underwriter for the issue while Development Bank of the Philippines, BDO Capital & Investment Corp., ING Bank N.V, and Land Bank of the Philippines will serve as lead underwriters for the domestic issue.

Proceeds of the IPO will be used for the modernization and upgrading of the company’s facilities and for other capital requirements.

Expecting the huge success of the IPO, the PSE board has advised all brokerage firms to give allocations to the investing public and not the corner bulk of the IPO shares.

PNOC-EDC is setting aside P2.98 billion for its capital expenditures next year. Of the proposed budget, P1.35 billion will go to the first phase development of the North Luzon Wind Power project, which involves the establishment of wind farm facilities with support equipment, related transmission lines and substation facilities in Ilocos Norte. The first phase of the project is expected to be completed by the first quarter of 2009.

PNOC-EDC is also studying other potential sites in Ilocos Norte, which will potentially generate 98 megawatts of power. Studies for two other sites were funded by the German government.

In the Visayas, the company has recently completed a feasibility study in Manoc-Manoc in Malay, Aklan funded through a German grant.

In Palawan and Camiguin Island, PNOC-EDC is likewise conducting new studies through a grant from the Spanish government.

In Mindanao, the company has installed meteorological masts in Nubenta, Carrascal, Surigao del Sur.

In the nine months ending September this year, PNOC-EDC has already spent P2.84 billion mainly for the construction of the Northern Negros Geothermal project power plant.

PNOC-EDC has earmarked around P1.04 billion for the period October 1 until the end of the calendar year to be used mainly for the completion of the Northern Negros Geothermal power plant project.

The company accounts for about 60 percent of total installed geothermal energy capacity in the Philippines, the world’s second-biggest producer of geothermal energy. It supplies fuel to 12 power plants.

Its four geothermal fields in Leyte, Negros Oriental, Bicol and Cotabato have a total capacity of 1,149.4 megawatts as of end-December 2005.

The IPO is in line with governments policy to restructure and privatize the power sector to reduce its role in industries where there are private sector interests, and to further cut its yawning budget deficit.