KOREA Electric Power Corp. (KEPCO) said it is buying out the British partner of the Lopez group in two natural gas plants. In a statement, KEPCO said it is buying for $400 million the BG Group's 40 percent stake in the 1,000-megawatt Santa Rita and 500-megawatt San Lorenzo plants, both of which are in Batangas province.
KEPCO said that buying into the assets would strengthen its position in the Philippine power industry. The Korean company runs the 1,200-megawatt Ilijan power facility and the 650-megawatt Malaya power plant.
By buying into the Sta. Rita and San Lorenzo plants, KEPCO would maintain a 10-percent market share in the power sector even after the build-operate-transfer contract it signed with the government for the Malaya plant expires next year.
Lopez-led First Gen Corp., which holds the remaining 60-percent stake in the Sta. Rita and San Lorenzo facilities, separately told the Philippine Stock Exchange that it was still evaluating its rights and options with respect to BG's proposed divestment of its interest in the two plants.
The completion of the acquisition is contingent on the approval of the power generating arm of the Lopezes, which earlier had indicated its hesitation over a possible partnership with the Korean firm.
Francis Giles Puno, First Gen president, said that the company may have a potential conflict of interest with KEPCO, which operates the Ilijan natural gas plant in Batangas.
Both First Gen and KEPCO are vying for additional supply of gas from Malampaya, which fuels their respective power plants.
"The only one in the gas business right now is KEPCO so they are our direct competitor. If we feel that the conflict is something that we cannot live with, then we have to look at options [such as exercising the] right of first refusal [or] bringing in another partner that we would prefer," Puno said.
source: APEC-VC Korea
