To Wait or not to Wait: Politics and policy driving Philippines development

In the Philippines, another 100 mw of electricity generated from geothermal resources is on hold. The parties in the deal, which includes APC Group and an un-named foreign entity, have postponed the deal until a new administration under President Benigno Aquino has settled in.

On the other end of the spectrum, the International Finance Corp. (IFC) isn’t waiting for anyone. It is said to be interested in funding an Energy Development Corp. (EDC) plan to put together an international holding company with the aim of furthering the privatization of the country’s geothermal power plants.

APC would not name the partner, but speculation is centered on the Philippine unit of U.S.-based Chevron Corp. APC Group chairman, president and chief executive officer Willy Ocier told the Business Mirror that a deal may be concluded “by September” this year and that the partner is “just waiting for the new government.”

When signed, the deal will open the door to the construction of a 100 MW plant in Northern Luzon. The company, which has investments in energy, mining, manpower outsourcing and telecommunications, recently approved a capital restructuring plan with an eye on becoming a major player in the geothermal power sector.

APC holds the contract for the 65,000-acre service area in Batong Buhay, Kalinga that has a generation potential estimated between 120 MW and 200 MW. Once a deal is reached – or a new government is in place – the area will host the new construction. APC shares climbed 4.4% after the original story was published.

Meanwhile, EDC president Richard Tantoco said that there are other entities who may also be interested in a plan to expand EDC’s international operations. EDC has previously discussed plans to tap the international market further, and wants to lead the world in the production of geothermal energy.

In 2006, IFC invested $50 million during EDC’s initial public offering in 2006 and sees the investment supporting the government’s goal of privatizing energy sector assets. The result should be improve efficiency and further expansion in the geothermal energy sector.