First Gen allots $530-million capital expenditure for 2021

By Angelica Y. Yang, Reporter

FIRST Gen Corp. is allocating $530 million of capital expenditures (capex) this year, with majority going to projects of its geothermal subsidiary Energy Development Corp. (EDC), an official of the firm said on Wednesday.

“In 2021, we are expecting to spend about $530M in capital expenditures, mainly driven by EDC, the LNG (liquified natural gas) terminal (in Batangas City), and the Aya Pumped Storage Project (in Nueva Ecija),” First Gen’s Chief Financial Officer Emmanuel Antonio P. Singson said during the firm’s virtual annual stockholders’ meeting on Wednesday.

The amount will cover $280 million of funding for EDC’s drilling activities, investments, and binary geothermal projects; $120 million for First Gen’s planned offshore LNG terminal; and $60 million for the 120-MW Aya Pumped Storage in Pantabangan, Nueva Ecija.

“EDC is targeting a higher capex this year… as the COVID-19 pandemic resulted in the postponement of key activities last year. The ($280 million) figure also includes the capex for the development of EDC’s binary growth projects —specifically the 3.6-MW Mindanao 3 and the 29-MW Palayan Bayan project,” Mr. Singson said.

In his speech, First Gen Chairman and Chief Executive Officer Federico R. Lopez said that EDC is working on lowering the cost of geothermal power, but he clarified that the adjustments will not yet be “as dramatic” as those related to renewable energy and battery storage, which have considerably gone down in the past five years.

During the event, First Gen President and Chief Operating Officer Francis Giles B. Puno said that the firm’s LNG interim offshore terminal is on track with its timeline. The company aims to complete the project in the third quarter of 2022.

“The plan is to modify First Gen’s existing jetty facilities in Batangas to enable LNG to be shipped to the country from anywhere in the world and regasify the LNG molecules via a floating storage and regasification unit,” Mr. Puno said in his speech during the stockholders meeting.

This year, the firm will focus on the terminal’s construction, and finalize the list of LNG suppliers, he added.

Earlier, the Lopez-led company received a permit to construct from the Department of Energy. First Gen also tapped McConnell Dowell of Australia for the turnkey construction contract and awarded the vessel chartering contract to BW Gas Ltd. of Norway.

“Our own transition to a decarbonized future will be anchored in the next few years by our efforts to bring in liquefied natural gas before the end of Malampaya,” Mr. Lopez said, referring to the imminent depletion of the country’s only natural gas field.

“While we are embarking on this timely shift to LNG, we are, at the same time, also planning for its eventual phaseout in ways that complement a pathway to carbon neutrality by 2050 and consistent with a 1.5 degrees Celsius target,” he added, citing the goal of the Paris agreement of which the Philippines is a signatory.

Mr. Puno also gave updates about the firm’s 120-MW Aya pumped storage project, which has secured key permits, including one from the Board of Investments, amid the global health emergency. He said that the project’s environmental impact assessment study is underway.

First Gen earlier reported that its attributable net income to its parent firm rose 29% year on year to P4.01 billion ($84 million) in the first quarter amid higher recurring earnings from its natural gas and renewable energy portfolios.

Shares in First Gen at the local bourse inched down by 0.97% or 30 centavos to finish at P30.60 apiece on Wednesday.