UPDATE – First Gen sells Pantabangan-Masiway stake to affiliate

Philippine power producer First Gen Corp. has sold 60 percent of its subsidiary operator of the 116-MW Pantabangan-Masiway hydroelectric complex to another subsidiary, Energy Development Corp. (EDC).

First Gen said its board voted October 15 to sell 60 percent of First Gen Hydro Power Corp. to EDC for about US$105 million. The deal is the first venture into hydropower for EDC, whose 1,905 MW of geothermal power reportedly makes the Philippines the second largest geothermal producer after the United States.

First Gen had said October 8 that it might sell Pantabangan-Masiway as a way to help pay large foreign obligations and reduce foreign exchange losses. (HNN 10/9/08) First Gen President Federico Lopez had said the company might borrow less than the US$700 million it needs from banks to refinance debt because of pricing difficulties and, instead, could sell some assets.

The debt was incurred by First Gen’s US$1.35 billion purchase last year of a 60 percent stake in EDC and investment in a 1,000-MW gas-fired plant on Luzon Island.

�Our entry into the hydropower space clearly complements our portfolio and provides EDC with vast opportunities for growth,� EDC President Paul Aquino said, adding the firm is developing an 86-MW wind project.

�Pantabangan is a crown jewel of an asset and will open up a lot of opportunities for EDC to grow and also learn about the attractive Luzon power market,� Lopez said.

First Gen acquired the 104-MW Pantabangan and 12-MW Masiway hydroelectric projects in Nueva Ecija Province for US$129 million in a 2006 privatization auction of National Power Corp. assets. (HNN 7/4/08)

In February, First Gen Hydro awarded a US$47.1 million contract to VA Tech Hydro GmbH of Austria to perform major refurbishment and upgrade work at Pantabangan that would increase its capacity 18 MW.

First Gen also plans to invest in additional generating units at both plants, increasing Pantabangan by another 65 MW and Masiway by another 13 MW. First Gen also plans another 1-MW increase at Masiway through upgrades.

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