First Gen Corp., the power generation arm of the Lopez group, is looking at the possibility of investing about $1 billion for the expansion of its existing power plants as well as for greenfield projects.
Francis Giles Puno, First Gen senior vice president and chief finance officer, told stockholders in a special meeting yesterday that the proposed investment will be carried out from now until 2011.
With these projects, Puno said First Gen will be able to double its net attributable capacity to 1,968 megawatts (mw) in the next four years from the present level of 1,098 mw.
In addition, the First Gen official said the company will also bid for several National Power Corp. (Napocor) generating assets.
Among these assets are: 850-mw Sucat power plant; the 192.5-mw Palinpinon geothermal power plant; the 700-mw Tiwi-Makban geothermal power complex; the 112-mw Tongonan geothermal power plant; the 1,100-mw of steam and the 700-mw of power from PNOC-Energy Development Corp. (PNOC-EDC); the 75-mw Ambuklao hydropower plant; the 100-mw Binga power plant and the 246-mw Angat hydropower plant.
First Gen vice chairman Peter Garrucho said actively bidding for these Napocor assets and those of other private power firms is consistent with the company’s aggressive strategy to expand its generating capacity.
“We will continue to bid based on what we think is a reasonable price for the assets. We spend a lot of effort and money to get into a more detailed analysis of the assets that stand and how much more we have to spend to bring it up to its full capability. So we will be guided by that. Obviously, it is not all just about winning. It is all about winning at a reasonable price and we will bid,” Garrucho said.
He said this strategy does not limit them from just going after Napocors’ assets but also through organic growth.
“We have to look at what actually are the possibilities of growth, which is like what we saw in Pantabangan-Masiway — we saw an opportunity for growth, which we are very pleasantly surprised to find out. And to the extent that we can discern that with the other facilities, we will obviously look at that,” he said.
From only 42 mw in 1995, First Gen has since steadily increased its capacity to 78 mw in 1999; 720 mw in 2000; 1,020 mw in 2002 and 1,098 mw in 2007.
As planned, the company is expected to pour in around $30 million for the 17-mw expansion of the Pantabangan-Masiway hydropower plants.
It will also be investing $400 million for the 500-mw San Gabriel natural gas-fired facility or liquefied natural gas (LNG). This project will be jointly undertaken with BG, formerly British Gas.
The group is also eyeing to partner with Tokyo Electric Power Co./Marubeni for the 385-mw expansion of the Pagbilao power plant estimated to cost $578 million.
Puno said funding these projects will not be an issue. “We have paid down $480 million in debt since 2000, and we are ready to tap the debt market for refinancing and our growth plans.”
Another fund raising option for First Gen, he said, is the increase in its capitalization through the issuance of 200 million preferred shares at a par value of P10 per share.
With the increase, the company’s authorized capital stock will rise to P3.65 billion from P1.65 billion.