First Gen Corp. said it is setting aside capital expenditures (capex) of $128.3 million and P7 billion to P8 billion next year for its gas business and geothermal unit, respectively.
During the company’s annual meeting held Wednesday, First Gen President Francis Giles Puno said about $110 million is allotted for its planned LNG (liquefied natural gas) terminal, $18.3 million for its existing gas plants and P7 billion to P8 billion for its geothermal business under company subsidiary Energy Development Corp. (EDC).
“The main driver of our capex is the LNG terminal, which has a total project cost of $200-$400 million. We expect to spend $60 million in 2020 and $110 million in 2021 for the LNG terminal,” said Puno.
First Gen filed last March with the Department of Energy (DOE) an application for a regulatory permit for the construction of its offshore terminal for LNG within its energy complex in Batangas City.
“We applied our permit to construct, expand rehabilitate and modify application with the DOE in March and are currently awaiting approval. We are hoping to start construction in the second half of this year,” said Puno.
The project, once completed, will bring in an interim floating storage and regasification unit (FSRU), which represents the initial phase of the FGEN Batangas LNG Terminal.
“The Covid-19 situation will most likely impact the global supply chain which could lead to some delays in the manufacturing of equipment, but we are looking to start construction by this quarter,” added Puno.
First Gen already operates four gas-fed power plants with an aggregate capacity of about 2,000megawatts (MW). These are the 1,000-MW Santa Rita, 500-MW San Lorenzo, 414-MW San Gabriel and 97-MW Avion.
“For the gas group, the total capex for 2020 is $20 million and $18.3 million for 2021,” he said.
The LNG project will play a critical role in ensuring the energy security of the country as the gas from the Malampaya facility is expected to be less reliable in producing and providing sufficient fuel supply for the country’s existing gas-fired power plants, and even less so for additional gas-fired power plants.
The gas contracts inked between the Malampaya consortium and the gas power plants will expire in 2021.
EDC, meanwhile, has set aside P7 billion to P8 billion in capex this year. Puno said the same amount would be allotted for next year’s capex.
“For EDC, the intention is to maintain capital expenditures as planned at P7 to P8 billion annually in 2020 and 2021.
However, the Covid-19 situation challenges our ability to execute, given various levels of quarantine across our sites. We have a plan in place to recover and to ramp up activities quickly once delivery of materials and mobilization of manpower can resume,” said Puno.
First Gen said demand for electricity has slowed down since the government imposed the community quarantine. It is, however, optimistic that demand will recover soon.
The company also noted that delays in the power projects could tighten power reserves.
“Construction of power projects may have already been delayed due to constraints in manufacturing and shipment due to global impacts of the pandemic,” it said.
“Our power reserves could tightenin the next 3-4 years and it is imperative that the government and private sectors attend to balancing the interests of both electricity consumers and power producers, ensuring that we continue to address the energy trilemma of the country.”
Energy trilemma refers to energy security, energy equity and environmental sustainability. Balancing the energy trilemma is one of the sustainability goals set by the United Nations.
