EDC allots $58 million for Chile project

by Lenie Lectura, BusinessMirror

Posted at May 15 2014 09:43 AM | Updated as of May 15 2014 05:43 PM

MANILA, Philippines - Geothermal-energy industry pioneer Energy Development Corp. (EDC) is earmarking $58 million in capital expenditure (capex) until 2016 to finance its geothermal projects in Chile.

EDC President Richard Tantoco said this year’s capex budget is around $12 million, while in 2015 and 2016 the listed firm is planning to set aside $46 million. “Capex for Chile this year is $12 million for roads, drilling pads and the water-supply system,” said Tantoco. EDC has spent $2.5 million for its international geothermal business in Chile to date.

For the next two years, EDC will allot $46 million to cover the drilling costs of three wells and construction of various facilities.

“These efforts support EDC’s goal of having the Mariposa project become one of the pioneering geothermal plants in Chile,” Tantoco added.

In June last year EDC signed a joint-venture agreement with Canadian renewable-energy firm Alterra Power Corp., which sets the framework and main commercial principles for EDC’s acquisition of a 70-percent interest in four of its projects, including Tutupaca Norte in Peru and the Mariposa project in Chile.

“For Mariposa, we awarded the contracts for detailed engineering design study and selected civil works in June 2013 and December 2013, respectively,” Tantoco said.

He said prospects remain bright for EDC’s international operations. Last year the company negotiated two joint-venture agreements and one acquisition in Chile and Peru, “continuing EDC’s expansion from zero concessions when we started in the region in 2010, to now having stakes in 20 concessions and another 44 applications.” EDC also signed a share sale agreement with Hot Rock Ltd. (HRL) to acquire 100-percent equity in its Peruvian and Chilean subsidiaries.

As the world’s largest integrated geothermal power producer, EDC and HRL seek to accelerate the development of the projects and offer a clean, reliable and indigenous source of energy to the people of Chile and Peru.

The two companies are also looking at the possibility of expanding the scope of partnership on other HRL-owned sites. EDC is also pursuing entry strategies in Indonesia. It has been granted preliminary survey rights for the Graho Nyabu bloc in Sumatra, which holds an estimated 150-megawatt resource.

“We are also exploring partnerships with key players in the Indonesian geothermal market, actively participating in negotiations over two high-potential sites,” the EDC official added.