FIRST Gen Corp. (FGC) of the Lopez Group intends to select a partner for its planned LNG (liquefied natural gas) regasification terminal by year-end, its top official said last week.
“We hope to announce a partner by the end of the year. It could be multiple partners, both local and foreign. We are talking to a number of them,” First Gen President Francis Giles Puno said when asked for an update of its LNG project.
The planned LNG terminal is estimated to cost around $1 billion.
He declined to name any of the interested partners, citing confidentiality agreements. He only stressed that the partner will help First Gen finance and operate the project. “It’s about a billion dollars for the LNG terminal. So, it’s hard for us to fund it alone.”
LNG is natural gas that has been converted into a liquid state for easier storage and transportation. Upon reaching its destination, LNG is regasified so it can be distributed through pipelines as natural gas.
In particular, First Gen is planning to develop an LNG receiving, storage and regasification terminal using LNG imported from abroad in order to address the expected depletion of Malampaya gas starting as early as 2022.
Puno said there are consultants crafting the design for site preparation activities. Actual construction will start next year after First Gen has chosen a contractor. The company already shortlisted to five the potential contractors that will build the facility.
“Site preparation takes time. So what we are doing is the design for the site preparation and then what we will do is bid out the contract next year,” Puno said referring to the bidding of the engineering, procurement, construction contract.
First Gen is the largest Philippine operator of gas-fired power plants in the country. It operates the 1,000-megawatt (MW) Santa Rita and 500-MW San Lorenzo gas-fired plants in Batangas province. It expects to switch on its third gas-fired plant, the 97-MW Avion open cycle natural-gas fired power plant, within the year.
The Avion power plant, which costs $100 million to $150 million, is adjacent to the Santa Rita and San Lorenzo plants. Construction is ongoing. It is expected to be operational this year.
A fourth gas-power plant, the 414-MW San Gabriel combined cycle natural gas-fired power plant that costs $550 million, will be put up in the second quarter of next year.
Puno said, “Both Avion and San Gabriel are progressing.”
First Gen recently signed a $200-million Term Loan Agreement with BDO Unibank Inc. (BDO) as lender and BDO Capital & Investment Corp. as arranger.
First Gen intends to use the proceeds from the notes as funding for its subsidiaries capital requirements and other general corporate purposes. The facility will have a tenor of 10 years from issue date.
Puno said proceeds of the loan will be used to refinance existing loan and partly pay for its power projects. First Gen is the holding firm of the Lopez group’s power business. It has an installed capacity of close to 3,000 MW, half of which is renewable and the other half of which is natural gas.