MANILA, Philippines - Guidance Management Corp. (GMC) and the APC Group are finalizing a farm-in agreement with a foreign investor for a geothermal exploration project in Kalinga-Apayao.
GMC chairman Joaquin Rodriguez said they hope to conclude the talks by June at the latest or “about six weeks from now.”
Rodriguez, however, declined to give the identity of the prospective foreign partner.
The geothermal service contract is owned by GMC and Aragorn Power and Energy Corp. (APEC), a subsidiary of publicly-listed APC Group.
The group is currently developing a 26,250-hectare geothermal area in Kalinga-Apayao which has the potential to produce 60 megawatts (MW) of electricity.
Aragorn Power and GMC are planning to explore the area with a budget of P3.7 million in the first five years.
“We’re concentrating on the Kalinga project,” Rodriguez said.
GMC is a consortium of 14 Filipino, Spanish, Australian and American investors. It started operations in 2005.
The company is also developing the Amacan geothermal prospect located in a 47,491-hectare area in Compostela Valley which has a potential output of 40 MW.
GMC also owns two coal operating projects in Negros and a $150-million joint venture biofuel project with Green Fuel Corp. (a firm owned by Endesa and Tecnicas Reunidas of Spain).
APC Group established Aragorn Power in 2005 with an authorized capital of P240 Million. Its first project area covers 748,000 hectares located at the Cagayan Basin.
The APC Group’s single biggest shareholder is Belle Corp., holding about 47 percent of the outstanding shares. On the other hand, the SM Group is a major shareholder of Belle Corp.
Aragorn Power, for its part, earlier said the entry of the foreign geothermal operator for the exploration and development of the company’s Kalinga project is “being pursued with vigor.”
“The farm-in agreement and the joint operating agreement are expected to be finalized and signed soon,” the company said in a disclosure to the Philippine Stock Exchange.
The company said together with its partner GMC, they are now in advance stages of forging a partnership for the exploration and development of the Kalinga service area with a foreign operator with proven track record in geothermal energy.
It said its geothermal service contract for the Kalinga project was converted into a renewable energy service contract in late March, enabling the project proponents to avail of the incentives provided under the Renewable Energy Act Act of 2008.
Under the Renewable Energy Act, all renewable energy developers are entitled to avail of incentives such as income tax holiday for the first seven years of commercial operations (10 percent after seven years), duty- free importation of machinery, equipment and materials and zero percent VAT.