PNOC-EDC seeks advance from proceeds of sale

The PNOC-Energy Development Corp. (EDC) wants its financial advisor to advance the proceeds to be raised from the company’s privatization to support its bid for the geothermal power plants of the National Power Corp. (Napocor).

EDC president and CEO Paul Aquino said they would ask CLSA Exchange Capital to immediately come up with a mechanism to raise the much-needed funds as the Power Sector Assets and Liabilities Management Corp. (PSALM) has apparently decided to sell Napocor’s geothermal power facilities ahead of schedule.

"We are privatizing EDC so we can raise funds and bid for the geothermal power generation facilities of Napocor. We heard these assets would be sold earlier than we anticipated or earlier than our scheduled privatization process. So, we need CLSA to help us raise funds immediately or advance us money if necessary," he said.

PSALM will privatize 19 power plants this year, including four geothermal power facilities. These are: the coal-fired power plant-600-megawatt Calaca; hydroelectric plants – 75-MW Ambuklao and 100-MW Binga which will be offered as one package, 12-MW Masiway, 100-MW Pantabangan, 360-MW Magat, 246-MW Angat, and 0.8-MW Amlan; geothermal plants – 275-MW Tiwi and 410-MW Makban as one package, 150-MW Bacman, 192.5-MW Palinpinon, and 112.5-MW Tongonan; bunker oil-fired 850-MW Sucat, 146.5-MW diesel-fired Dingle and the package of 620 -MW combined cycle Limay and Bataan thermal site; and decommissioned plants 225 -MW Bataan Thermal, 200- MW Manila Thermal, 54-MW Cebu II, 22.3-MW General Santos and 108-MW Aplaya.

EDC has scheduled the sale of its nine billion shares through a combined strategic sale (six billion) by August and an initial public offering (IPO) (three billion) in the latter part of this year.

Aquino said under the terms of reference (TOR) signed with CLSA, the financial institution "should be able to fulfill its mandate which is to allow EDC to bid for the geothermal facilities of Napocor."

Though EDC is confident CLSA has the capability to raise the funds, Aquino said: "We want the mechanics to be in place just in case we need the money already to buy these geothermal generating assets of Napocor."

Aquino said they expect the final privatization blueprint for EDC to be submitted to the boards of PNOC and PNOC-EDC by the first week of April.

EDC is the country’s largest producer of geothermal energy accounting for more than 60 percent of installed generating capacity. Its four geothermal fields in Leyte, Negros Oriental, Albay/Sorsogon and North Cotabato have a total capacity of 1,149.4 MW. In 2006, it will commission two more geothermal projects, the 40-MW Northern Negros and the 20-MW Palinpinon 2 optimization power plants. It will also enter into wind power generation with the commissioning of the first 40 MW of its Northern Luzon Wind Power Project (NLWPP) in Burgos, Ilocos Norte.

Aside from its role as EDC’s financial advisor, CLSA, also serves as an underwriter and global coordinator for the EDC privatization program.

Established in 1988, CLSA is a leading underwriter of equity and equity-linked securities for Philippine corporations and is a majority owned subsidiary by CLSA in Hong Kong.

From 2000 to 2004, CLSA has been involved in 13 energy equity capital market transactions in Asia worth $8.8 billion.