Partnership of Kepco, First Gen may not push through

MANILA, Philippines - First Gen Corp. and Korea Electric Power Co. (Kepco) may not be able to join forces in bidding for the 40 percent stake in BG Group as this may result in some legal issues, a top First Gen official said.

“Although Kepco is a well-respected company, we have to understand what their plans are, and if it runs with conflict with our plans, then that partnership with Kepco may not be necessarily be feasible,” First Gen president Francis Giles Puno said.

It would be noted that both First Gen, through its subsidiary First Gas Corp. and Kepco, through its arm Kepco-Ilijan Philippines Inc., have stakes in natural gas industry.

Their engagement in natural gas businesses makes the two firms basically “competitors” with each other. This may result in some problems in reconciling their business agenda if they would partner with each other in buying the BG Group’s stake in First Gas.

BG Group had announced intentions to sell its 40 percent stake in the 1,000 MW Sta. Rita and 500 MW San Lorenzo gas fired power plants which it co-owns with the Lopezes.

According to Puno, they do not want to encounter conflict of interest in the near future should they partner with Kepco.

“The only one in the gas business right now is Kepco so they are our direct competitor. If we feel that the conflict is something that we cannot leave with, then we have to look at options, then the option would be right of first refusal and the other option would be bringing in another partner that we would prefer,” he said.

Moreso, Puno said they are also eyeing same opportunities in the natural gas industry.

“If we bid against them (Kepco) then they will know what our plans are going to be,” he said, noting that they are both vying for the 300-megawatt excess capacity of the Malampaya natural gas project in Palawan.

“The issue that we are looking at is, for example, we have a gas expansion, is that in potential conflict with the likes of Kepco? If we feel that it is potentially conflicting or if they could be construed as competitor, then certainly from our agreement, we may have a problem with that,” he said.