First Gen vice chairman and CEO Peter Garrucho Jr. told reporters that the upgrade and modernization program would increase the capacity of the two power plants to 190 MW.
For the upgrade of the two facilities, expected to start early next year and completed by mid-2008, the company intends to spend between $20 million to $25 million.
The upgrading would result to an additional capacity of 15 MW for each of Pantabangan’s two 50-MW units.
The upgrade of Masiway, on the other hand, will add one MW in the power plant’s capacity.
Meanwhile, Garrucho said the $80-million expansion project would be completed in 2010 in time for the expected additional power demand in the Luzon grid.
The expansion of capacity will involve putting in additional units to add 65 MW for Pantabangan and 13 MW for Masiway.
Garrucho said the upgrade and expansion would be financed by the proceeds from the company’s recent $90-million bond offering, $170-million initial public offering (IPO), and from internally-generated funds.
"We had substantial fund raising already. In addition, there are internally-generated funds that every year add to our coffers – as we have been paying most of the debt of Sta. Rita and San Lorenzo and because we benefited from the payment of the Siemens dispute – we have significant borrowing capability in addition to the aforementioned. For the requirements of the Pantabangan-Masiway, I think, we will be fine. Our hope, of course, the asset – which is First Gen Hydro – will be able to borrow for itself. But if needed, the parent company will be able to secure the expansion or upgrade program," he said.
Garrucho said he is also optimistic the project would merit some incentives from the Board of Investments and the Department of Energy (DOE).
According to Garrucho, First Gen is already preparing to serve the electricity requirements of customers transferred to them by the National Power Corp. (Napocor) which they will be serving beginning Dec. 26.
Since the takeover, the two plants have sold their electricity to the wholesale electricity spot market (WESM).
"We benefited because WESM prices were at high levels. The Malampaya pipeline was undergoing maintenance and the Sual plant was down," he said.
First Gen has already paid $56 million to the state-run Power Sector Assets and Liabilities Management Corp. as part of the upfront payment for the purchase of the Pantabangan-Masiway facilities for $129 million.