First Gen sets $1-B capex, plans Casecnan upgrade

By Ashley Erika O. Jose, Reporter
FIRST GEN CORP. is setting aside $1.1 billion for this year’s capital expenditure (capex), which includes funds to optimize the Casecnan hydroelectric power plant that the Lopez-led company offered to buy for $526 million, the top bid in a government sale.
This year’s spending comes as the company completed the bulk of its capex for a liquefied natural gas (LNG) terminal, which it expects to take in its first imported fuel shipment by September this year.
Emmanuel Antonio P. Singson, senior vice-president, chief financial officer, and treasurer, said in a briefing on Wednesday that the biggest chunk of the capex, or more than $400 million, will be for renewable energy arm Energy Development Corp. (EDC). About $90 million is allotted for the LNG project, and $50 million for the Aya pump storage project, with the rest going to the firm’s gas power plants.
First Gen’s capex this year is about double last year’s $550 million.
In a stock exchange disclosure on Wednesday, First Gen said that its wholly owned subsidiary Fresh River Lakes Corp. had been declared the highest bidder of the 165-megawatt Casecnan hydroelectric power plant in Nueva Ecija, which state-led Power Sector Assets and Liabilities Management Corp. (PSALM) proposed to sell.
Casecnan, a run-of-river type of power facility with limited water impounding, attracted eight qualified bidders, as announced recently by PSALM.
“We are quite encouraged with the way we’ve shifted the portfolio, including the purchase of Casecnan, because assets like that are very hard to replicate and they’re all in tune [with] where the world is headed with regards to a decarbonized energy system,” Federico R. Lopez, chief executive officer of First Gen, told reporters on Wednesday.
Francis Giles B. Puno, president and chief operating officer, said the Casecnan plant could supplement First Gen’s Pantabangan-Masiway hydropower plant and its Aya project.
“Right now, when you look at Casecnan, fundamentally it’s a very important asset for us because we obviously have Pantabangan-Masiway there. We have the plans for Project Aya, which is there,” Mr. Puno said.
First Gen’s 132-MW Pantabangan-Masiway hydroelectric power plant complex is located in Nueva Ecija and is operated by First Gen Hydro Power Corp. while Project Aya is located in Pantabangan, Nueva Ecija.
“Casecnan is upstream and to the extent that we could supplement even more supply coming from the upstream side of Casecnan, then that will help Pantabangan-Masiway and Project Aya,” Mr. Puno said.
Separately, the Department of Energy (DoE) said in a statement that Fresh River Lakes would undergo a thorough post-qualification assessment to verify the authenticity and eligibility of the bid and other relevant documents it submitted.
Energy Secretary Raphael P.M. Lotilla noted that the successful privatization of Casecnan would help strengthen the country’s energy security.
“With the private sector injecting the necessary efficiency and capital for energy expansion, we can ensure a reliable and resilient energy sector for our nation’s future,” Mr. Lotilla said.
Jonathan C. Russell, the company’s executive vice president and commercial officer, said the construction of First Gen’s LNG terminal was completed in March.
“We achieved practical completion. And we just recently filed our application for a permit to operate and maintain with DoE. We are now in what we call the dry commissioning phase,” Mr. Russell told reporters.
First Gen, through its subsidiary FGEN LNG Corp., is one of seven proponents of LNG projects in the Philippines.
Mr. Russell said the company expects the commissioning of its floating storage regasification unit (FSRU) by September.
“We will be doing the wet commissioning phase, which involves the receipt, storage and regasification of LNG, and then we’ll use that in our power plants to commission the power plants and LNG for the first time. So it is a natural progression,” he said.
In line with this, First Gen is also about to issue a tender in the next two weeks for an LNG spot cargo of about 160,000 cubic meters, Mr. Russell said.
“That cargo will then be used for wet commissioning and then the first supply to power plants’ electricity using LNG,” he added.
Mr. Russell said the cargo delivery is also expected in September.
“We are in parallel discussions for medium- to long-term supply. Those are ongoing with different entities. For now, we are prioritizing the spot tender, so we can get the project in operation, then the medium- to long-term contract will then follow. We anticipate those will start by 2024 at the earliest,” he added.
First Gen is also committed to expanding its clean energy portfolio to up to 13 gigawatts of new clean and renewable energy by 2030.
“The reason we are putting it as a 2030 target is we’re aligning it with the DoE’s forecasted demand. If the government is saying this is the demand growth, then we’ll have to keep up with that demand growth. It is aligned with that,” Mr. Puno said.
To achieve this, the company will need about $20 billion in capex.
The company’s target growth will mainly consist of wind energy or about 5,100 MW, followed by gas at 2,000 MW, solar at 1,500, geothermal at 700 MW, hydropower at 300 MW, and battery energy storage system at 40 MW.
“Our efforts remain focused largely on helping to reduce the carbon intensity of the electricity grid and then ultimately to decarbonize it. We’re making it our mission to shepherd the energy transition to net zero,” Mr. Lopez said.
On Wednesday, First Gen shares surged 6.84% or P1.28 to close at P19.98 each.