₱ 5.6-Billion Solar Plant will rise in the Philippines - ATN Philippines Solar Energy Group Inc

The Board of Investments has granted limited income tax holiday to the P5.676 billion 30-megawatt solar power project of wholly-owned Filipino firm ATN Philippines Solar Energy Group Inc.

ATN, a joint venture of ATN Holdings Inc. and Transpacific Broadband Group International Inc., has proposed to sell electricity for P17.95 per kilowatthour. It would employ a total of 30 personnel when it starts commercial operation in December 2013. It is funded by 23.5 percent equity and 76.5 percent debt.

The project is under the Mandatory List of the Investment Priorities Plan and is entitled to incentives under the RE. Law or RA 9513. The firm is also registered with the Department of Energy as a new RE developer of solar energy resources.

In approving the project, however, the BoI said that once the feed-in-tariff (FIT) is in place, ATN should no longer be entitled to income tax holiday as the FIT is in itself the guaranteed return.

This decision is based on its general guidelines which provide that projects with sovereign guarantee or guaranteed rate of return are not entitled to income tax holiday.

However, the BoI Legal Department said that under the RE Act of 2008 (RE 9513), the firm is entitled to all incentives including the ITH. The law provides for a seven year ITH for RE projects. The BoI also noted a position forwarded that non-grant of ITH delivers a major impact on the proposed financial performance as the same is already considered when the proposed FIT was computed.

Given this conflicting positions, the BoI management committee has given instruction to communicate with the Department of Energy on all matters relative to the applicability/implication of FIT in the incentives granted to RE projects.

On the ATN's proposed a selling price of electricity of P17.95 per kwh, the BoI said that such rate shall still be subject to ERC approval in compliance with the feed-in-tariff rules.

The FIT system is a scheme that involves the obligation on the part of electric power industry participants to source electricity from RE generators at a guaranteed fixed price applicable for a given period of time, which shall in no case be less than 12 years, to be determined by the Energy Regulatory Commission.

Based on its application, ATN will put the plant in the 324 hectare property of ATN Holdings in Montalban, Rodriguez Rizal, which is less than 10 kilometers away from densely populated business districts in Metro Manila.

The company said that its power supply during the peak hours would contribute in the reduction in capital cost of base load generating plants that use imported coal, and save the country's foreign exchange capital and operating costs for power generating units.

ATN is targeting to serve Metro Manila, particularly the peak demand of mall in the high growth business districts in Quezon City.

It can also sell electricity directly to end users under the Wholesale Electricity Sport Market (WESM) set-up. It may also negotiate with the National Power Corp. as primary off-take customers that will distribute power through the Transco.

The company claimed that its 30-mw solar project is equivalent to 60 million kilowatthours of clean energy.(BCM)

Continue reading

San Miguel Philippines will invest up to US$ 1 Billion to refurbish the Port Dickson refinery

Philippines conglomerate, San Miguel Corporation (SMC), which acquired a 65 per cent stake in Exxon Mobil Corporation's interest in three businesses operating in the Malaysian downstream petroleum sector, plans to invest up to US$1 billion to upgrade and install new equipment in the 48-year-old Port Dickson refinery.

Member of the Board of Directors of SMC Eric Recto said the corporation was looking at bringing in new machinery to create more value-added products in the Malaysian market.

"We are looking at the same achievement we did when we acquired Petron Corporation three years ago.

"The Malaysian refinery is a useful asset, given that a fair level of investment is poured in to replace the old machinery and equipment," he told Malaysian journalists via voice-conference from Manila today

SMC holds 68 per cent equity in Petron Corporation

Recto, who is also Petron Corp president, said the plan would be executed over a long-term process between three and five years.

ExxonMobil and SMC signed a sales and purchase agreement for the latter to sell its 65 per cent stake in public-listed petroleum trading company, Esso Malaysia Bhd (EMB), and its wholly-owned, ExxonMobil Malaysia Sdn Bhd (EMMSB) and ExxonMobil Borneo Sdn Bhd (EMBSB), to the Philippines' highly-diversified entity for US$610 million or RM3.50 a share of EMB.<

SMC is a Philippines business conglomerate and the parent company of Petron Corp, the largest oil refining and marketing company in the Philippines.

Its 68 per cent-owned subsidiary, Petron Corp, is the largest integrated oil refining and marketing company in the Philippines, with a crude distillation capacity of 180,000 barrels per day and over 1,700 service stations across the Philippines.

Under the deal, other than the Port Dickson refinery, 10 fuel distribution terminals (7 active); about 560 branded retail fuel sites (420 company-owned); and ExxonMobil's Industrial and Wholesale and Aviation fuel businesses, will be controlled by San Miguel.

Recto said the upgrading would enable the Port Dickson refinery, which currently produces 50,000 barrels per day, to maximize the plant's production capacity to 88,000 barrels a day.

The investment, he said, would be divided into two segments; the first 70 per cent would be derived from financial institutions, while the remaining 30 per cent would be from San Miguel.

"In this case, ExxonMobil Malaysian operations can stand on its own as it will fund 30 per cent of its operations in Malaysia.

"Only if extra investment assistance is needed, SMC would step in. However, we will be very careful from where the money comes from," he said, citing the recent concerns from locals about where the money will come from, given that San Miguel was a beer company initially.

Recto clarified that currently SMC, based in the Philippines, is a highly diversified conglomerate, with businesses ranging from food and beverages to petroleum, power, energy and infrastructure.

The company now derives more than 70 per cent of its revenue from the non-food and beverages segment.

As for the bank, Recto said banks from both Malaysia and the Philippines were keen to finance the company's investment expenditure.

"There will be no doubt that Malaysian banks will be given priority, given their achievements and capabilities," he said.

In enhancing human capital, Recto said SMC promises not to retrench any of the existing operational staff in the refinery and in other businesses as SMC  needs all of them, and even more workers in the future in tandem with its goal to maximize utilization of the refinery.

"We will be creating more job opportunities and the first priority will be given to Malaysians.

"When we first acquired the Manila refinery, we needed around 20-25 per cent extra workers to rebuild and reorganize the plant," he said, adding that a similar workforce might be needed in Port Dickson

Continue reading