First Gen set to award construction deal for San Gabriel plant

MANILA, Philippines - Lopez-led First Gen Corp. is set to award the construction deal for its 500-megawatt (MW) San Gabriel natural gas power plant in Batangas worth roughly $1 billion early next year with or without a partner.

This will allow the company to pursue and complete another 700 to 800-MW natural gas project in 2018, an executive said.

“We plan to award (the construction contract) next year because we want to be able to complete at least the first phase investment by 2015,” First Gen president Francis Giles Puno told The STAR.

“With or without a partner, we will award. What we are trying to do is we try to complete the first phase of San Gabriel by the fourth quarter of 2015,” he added.

In August, First Gen and Manila Electric Co. (Meralco) said they are in talks for the 400 to 500-MW San Gabriel power project.

“I think the talks are still on. My understanding is that we are open to partner with them,” Meralco president and CEO Oscar Reyes said in an interview.

First Gen, which secured an environmental permit to build the MW San Gabriel natural gas-fired power plant in 2005, expects large electricity demand come 2015.

“We are trying to put ourselves in the position where we can deliver that capacity by the tailend of 2015,” Puno said.

The San Gabriel plant will be fueled by available gas from the Malampaya deepwater gas-to-power project or by imported liquefied natural gas.

In May, First Gen bought out the remaining 40-percent stake of the BG Group in First Gas Holdings Corp., the owner of the 1,000-MW Sta. Rita and the 500-MW San Lorenzo natural gas power plants, for $360 million.

This allowed First Gen to freely pursue the San Gabriel project.

Moving forward, partners are still welcome for the second phase of San Gabriel project, Puno said.

“By the second phase, we are looking at a larger capacity, an additional 800 MW,” Puno said, adding that it is targeted to be completed in 2018.

The second phase will still require permits from the government, Puno said.

First Gen might lock in on record-low interest rates for the San Gabriel project.

“At the moment, we do not have any fundraising but if we start construction the first phase of San Gabriel first quarter of next year then we will look at financing also,” Puno said.

Earnings of First Gen surged by almost 15 times to $147 million in the nine months to September from $10.1 million last year due to strong performance of its geothermal, hydropower and natural gas units.

To date, First Gen and its units have a gross generating capacity of 2,763 MW, of which 1,500 MW is natural gas, 1,129 MW is geothermal and 134 MW is hydropower. It accounts for 18 percent of the country’s total installed power generation capacity.