STEAG to kick off negotiations with prospective investors on sell-down plan
Sunday, January 14, 2007
By MYRNA M. VELASCO
MISAMIS ORIENTAL — German firm STEAG AG plans to formally start negotiations next year for the sell-down of 38 percent of its shareholdings in the 210-megawatt Mindanao coal-fired power facility which was inaugurated for commercial operations last Monday (January 8).
STEAG vice chairman of the board and head of project realization and power plants international Claus-Peter Bell told a media briefing that they held talks with interested parties, but there were no formal negotiations yet.
The prospective investors eyeing to buy the equity are local firms First Gen Corporation, Aboitiz Equity Ventures, Korea Electric Power Corporation and some Japanese power companies.
"We talked to them but we didn’t start any negotiations yet," Bell said, adding that the company’s strategy would be to hold on to majority shareholdings of 51 percent until the lapse of its 25-year power purchase agreement (PPA) with state-run National Power Corporation. The power supply deal was inked in 1998.
The STEAG official noted that the sell-down process is similarly being carried out for their power investments in Colombia. "The sell-down for the Philippines will be done separately," he added.
The sale strategy is reportedly being pursued by the German firm so that it can already cash in part of the capital it poured in for the project and so that it can spread investment risks.
Amidst its plan to reduce equity shares in the Mindanao project, the Philippine government is encouraging the German investors to expand their investment foray in the Philippines.
STEAG AG has majority equity of 89-percent in the Mindanao power facility; while the 11 percent is held by its local partner, State Investment Trust Inc. (SITI) chaired by Allen C. Roxas. This company is one of the country’s first and leading investment houses that is also involved in the development of high-end residential and commercial projects.
SITI was the original project proponent of the Mindanao facility after winning in April 1995 the contract for it in an international competitive bidding held by state-run National Power Corporation.
SITI acted as the primary project developer, primarily in negotiating and obtaining all the government permits and approvals. It later partnered with STEAG to construct the power plant.
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