FPH eyes new geothermal energy project in Indonesia

By VG Cabuag, BusinessMirror

Posted at May 27 2014 07:26 AM | Updated as of May 27 2014 03:26 PM

MANILA - Lopez-controlled First Philippine Holdings Inc. (FPH) is considering joining a new geothermal energy venture in Indonesia, as it expects to sign a formal joint venture with a local company by the second half of the year.

Chairman and Chief Executive Officer Federico Lopez said the company may use the Energy Development Corp. (EDC) for the said geothermal venture in Indonesia, an oil producer and Southeast Asia’s largest economy.

He said the Lopez company may build facilities with 220 megawatts (MW) in total capacity. First Holdings controls EDC, another publicly listed company that operates several geothermal power plants in the country. “Indonesia is just opening [its] power sector. It’s not as deregulated as ours.

They are promoting geothermal [energy sources]. So it’s a good opportunity for a company like EDC,” Lopez said in a briefing after the annual stockholders’ meeting.

The company declined to name the company as the deal has not been finalized. EDC has already been granted preliminary survey rights for the Graho Nyabu bloc in Sumatra, which has reserve estimates of as much as 150 MW of geothermal energy.

Francis Giles Puno, FPH’s chief finance officer and First Gen Corp.’s chief operating officer, explained that the entire investment for the project would entail about $1 billion.

EDC will initially account for about a quarter of the cost or but will later on increase its investment to acquire a majority stake.

“We will operate and maintain the plant because of EDC’s experience in operating a geothermal [power plant],” Puno said.

Puno said the company is leveraging on its expertise in the geothermal business to expand overseas. FPH is looking at a similar venture in Latin America, although this seen as a largely Greenfield project.

The Indonesian venture is considered more imminent. Last year EDC negotiated two joint-venture agreements and one acquisition in Chile and Peru, while it also signed a share sale agreement with Hot Rock Ltd. to acquire 100-percent equity in its Peruvian and Chilean subsidiaries.