EGCO looks for opportunity in the Philippines
THAI power firm Electricity Generating Public Co. Ltd. (EGCO) is keen on expanding its presence in the Philippines through acquisitions and construction of new plants as it notes the economy’s rising demand for energy.
EGCO is the international investment arm of Thai state-run firm Electricity Generating Authority of Thailand.
The Thai firm is on the lookout for opportunities to build plants with capacities ranging from 80 megawatts (MW) to 500 MW that will run on various resources like hydro, coal and natural gas as well as to acquire interest in existing facilities, Quezon Power (Philippines) Ltd. Co. (QPL) Managing Director Frank Thiel said after the 2012 Philippine Energy & Infrastructure Business Meeting at Makati Shangri-La on Tuesday.
“EGCO’s desire is to expand its presence in the Philippines. We can do hydro, coal, even natural gas. We’re not being constrained by size and technology,” Mr. Thiel said.
“We’re also on the hunt for potential acquisitions with those companies who desire to perhaps exit or sell even a small portion,” he added.“It’s a matter of evaluating opportunities. Were wide open right now.”
He clarified, however, that his company is not looking at those on the privatization block. Mr. Thiel said EGCO is bullish in the Philippines because of its booming economy, which is fueling demand for more power“We see the demand keeps increasing. We see potential need for additional capacity as government said there is a need to add 400 MW per year for the next few years just to stay ahead of the game, just to meet the demand that continues to rise,” he said.
For now, the company has not spotted potential acquisitions yet as the market is doing well, making it hard for companies to sell their interest in power plants.
“On power plant acquisitions, I think it would be tough to find because usually when a market’s doing well, it’s difficult to find someone willing to sell,” Mr. Thiel said.“So we’re looking for someone wanting to divest, maybe not the entire thing. We’ll be interested in that.”
EGCO currently has a 98% stake in QPL, which operates a 460-MW coal-fired power plant; a 31-kilometer, 230-kilovolt double circuit transmission system and related facilities in Mauban, Quezon province.
In May, EGCO raised its stake in Quezon Power to the current level after acquiring an additional 45.875% from US firm InterGen for $375 million. About 2% is held by PMR Ltd.
The Quezon Power project, which started commercial operations in May 2000, provides electricity to the Luzon grid under a 25-year power sales agreement with Manila Electric Co. (Meralco).
Earlier, EGCO said it intended to increase the capacity of the Quezon power plant by 500 MW and is talking with Meralco not only as a buyer but also as a partner for second phase of the plant.
“Meralco is our primary target. We have engaged and continue to engage Meralco as our offtaker. We’re positive we’ll be able to reach an agreement with them for the second phase of the plant. Ideally we want 100%, but if not, something at about 60-70%,” Mr. Thiel said, noting that Meralco already sources from the existing Quezon plant.
“We don’t consider Meralco as just an offtaker. We’re working with them, we engage with them; every other week, we have a meeting with them just to keep each other updated on where we are,” he added, noting QPL is willing to take a minority stake in the second plant.