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Energy Economy

Ayala power arm bares plan to purchase 20% stake in South Luzon Thermal Energy

6 November 2019

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Philippines

AC Energy Philippines Inc. (ACEPH), formerly Phinma Energy Corp., is moving to beef up its portfolio with a plan to purchase Axia Power Holdings Philippines Inc.’s 20-percent stake in South Luzon Thermal Energy Corp. (SLTEC).

AC Energy Inc., the parent firm of ACEPH, told the Philippine Stock Exchange that a deed of assignment was signed Tuesday, whereby ACEI transferred its right to purchase the said stake of Axia Power in SLTEC in favor of ACEPH.

“Completion of the company’s acquisition of Axia Power’s ownership stake in SLTEC is subject to satisfaction of certain conditions precedent,” the power arm of conglomerate Ayala Corp. said.

SLTEC owns and operates a 2 x 135 megawatts (MW) coal-fired power plant in Calaca, Batangas. It is a joint venture of ACEI, Phinma Energy and Marubeni Corp.’s Axia Power.

Commercial operations for the first unit of the thermal plant started in April 2015, while the second unit was completed in February 2016. SLTEC operates as a baseload plant to meet the power demand of Luzon.

ACEPH’s renewable energy (RE) target capacity has been set at 2,000 MW by 2025 from 150 MW at present.

“Our vision for AC Energy Philippines is to be the leader in renewable energy in the country. Our goal is to reach 2,000 MW of renewables by 2025,” said company President Eric Francia.

The power firm is prepared to spend $2 billion to make this happen.

“With the government’s target of renewables reaching 35 percent of energy output by 2030, the country would need to build over 15 GW of renewables in the next decade. We will make significant investments in this space,” said Francia, adding that renewables would have to be complemented by other low-carbon technologies, such as gas-fired generation and energy storage, which the company will be exploring.

The other day, ACEPH reported it signed a share purchase agreement with the Philippine Investment Alliance for Infrastructure (Pinai) to acquire the former’s stake in North Luzon Renewables Energy Corp.

Pinai is a fund composed of Macquarie Infrastructure Holdings (Philippines) Pte. Ltd., Langoer Investments Holding BV and the Government Service Insurance System (GSIS). It has a 31 percent preferred equity ownership and 15 percent common equity ownership in North Luzon Renewables.

ACEI’s economic stake in North Luzon Renewables is 36 percent.

The acquisition is subject to definitive documentation and approval by the Philippine Competition Commission.

North Luzon Renewables is a joint venture of ACEI, UPC Philippines, Luzon Wind Energy Holdings (an affiliate of Mitsubishi Corp.), and Pinai. The wind farm started its commercial operations in November 2014. The 81-megawatt wind farm uses 27 units of Siemens SWT-3.0-101 wind turbines, where each turbine has an installed capacity of 3 MW.

Energy Cooperation ,
Renewables

Temasek-EQT joint venture to launch India green energy platform

6 November 2019

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Singapore

MUMBAI: Singapore’s Temasek is teaming up with Swedish private equity group EQT to launch a new renewable energy platform for India that will build wind and solar farms ground up and acquire assets to bulk up. A group of four senior executives from ReNew Power, led by Chief Executive Officer Parag Sharma, is leaving their current organisation to lead this new platform 02 Power as the operating management team, people aware of the development told ET. ..

Oil & Gas

Mitsubishi to shut Singapore oil-trading unit after losses by trader

6 November 2019

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Singapore

TOKYO, Nov 6 (Reuters) – Japanese trading house Mitsubishi Corp said on Wednesday it will shut down a Singapore unit that trades crude oil and petroleum products after alleging earlier that a trader racked up $320 million of losses in unauthorised trading.

Mitsubishi said the unit, Petro-Diamond Singapore, “has confirmed after closing the positions concerned, it will realize a loss of approximately 34.2 billion yen ($314 million) before taxes, which could put the subsidiaries final debt as high as 30.8 billion yen.”

Mitsubishi Corp, Japan’s biggest trading house by sales, said in September the trader at Petro-Diamond had lost $320 million through unauthorised transactions in crude oil derivatives and that the matter had been reported to the police.

The trader later denied wrongdoing in a statement issued through a lawyer.

Energy Cooperation

DBS and Trafigura to launch open-source blockchain trade platform

6 November 2019

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Singapore

It will cut trade document transit time from 45 to 20 days.

DBS Bank and energy company Trafigura, in collaboration with Infocomm Media Development Authority (IMDA), the International Chamber of Commerce (ICC), Enterprise Singapore and tradetech Perlin, has partnered to develop an open-source blockchain trade platform that will streamline manual paper-based trade processes and halve trade document transit time from 45 to 20 days, according to an announcement.

The platform’s pilot trade of $27.16m (US$20m) worth of iron ore will be shipped from Africa to China this month, the release added.

ICC TradeFlow platform is built on IMDA’s TradeTrust network infrastructure and powered by Perlin’s blockchain technology. It will reportedly enable companies based in digital harbours like Singapore to seamlessly trade with countries governed by traditional paper-based systems. All parties on the blockchain platform are also able to send, receive and act upon trade instructions in real-time, cutting the end-to-end trade document transit time by more than half.

Further enhancements will be made to the ICC TradeFlow platform, which include offering trade finance on-the-go as well as providing background information and credit ratings on trade participants, vessels and couriers.

IMDA is spearheading the development of a globally trusted network, TradeTrust, for digital trade documentation exchange, and is working with various government agencies, including the Maritime and Port Authority of Singapore, Enterprise Singapore, Singapore Customs, Government Technology Agency, and industry partners such as Singapore Shipping Association.

The planned network aims to reduce inefficiencies and complexities of cross-border trade arising from the current usage of paper-based documentation, such as bills of lading, according to the announcement. This, in turn, will reportedly reduce operating costs for businesses, lowers risk of fraud, and promotes more growth in trade.

Renewables

Uzbekistan picks Thailand’s Helios to deploy 110MW solar project

6 November 2019

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Thailand

Another major solar venture is in the works in Uzbekistan, with the government bringing in a foreign developer to deliver a project to the southwest of capital Tashkent.

In a statement this week, Helios Energy announced it has signed a deal with Uzbekistan’s Ministry for Innovative Development to deploy a 110MW solar plant in the region of Sirdarya.

The Bangkok-headquartered firm will develop, design and source components and build the large-scale installation, set to feature some 220,000 500W panels.

According to the timetable, installation of cabling should get underway at the 80-hectare site in early 2020, with the project set to become fully operational by late 2023.

The deal for the 110MW Sirdarya project comes only one month after the EPC secured the government’s go-ahead to a 40MW extension to a solar complex in the Namangan region.

According to Helios, the addition approved under the recent memorandum of intent takes the planned capacity at Namangan – a four-hour drive to Tashkent’s east – up to 360MW.

PV ambitions of Central Asia’s most populous state

Helios’ Uzbek forays look set to breathe yet more life into an already bustling solar scene in the Central Asian republic, which is being assisted under the Scaling Solar scheme.

The World Bank programme helped draw foreign eyes to Uzbekistan in early October, when the first competitive tender triggered a US$0.027/kWh bid for a 100MW solar contract.

At the time, transaction advisor IFC billed the bid by UAE firm Masdar Clean Energy as “game-breaking” for Uzbekistan and “one of the lowest tariffs” seen in emerging markets.

The country, Central Asia’s most populous, announced later last month it would follow its auction debut with second (400MW) and third (500MW) tendering rounds in the coming months.

The solar build-out efforts are part of Uzbekistan’s effort to curb its reliance on fossil fuels, natural gas in particular. The country is working to source 25% of its electricity from renewables by 2030.

Helios aside, other foreign names adding to the solar momentum include Canada’s Skypower Global – which is eyeing a 1GW pipeline – and France’s Total Eren, which is deploying a 100MW plant.

Energy Economy

Bank Islam signs strategic MoU with Sarawak Energy and SJPP

6 November 2019

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Malaysia

BANK Islam Malaysia Bhd recently signed a memorandum of understanding (MoU) with Sarawak Energy Bhd and Syarikat Jaminan Pembiayaan Perniagaan Bhd (SJPP) to provide financing solutions for vendors listed under Sarawak Energy’s Vendor Financing Programme.

With a total allocation of RM300 million, the programme aims at improving access to financing and liquidity for vendors with secured contracts from Sarawak Energy and are in compliance with Bank Islam’s credit assessment and SJPP’s eligibility and criteria.

Head of commercial banking Ahmad Haliman Abdul Halim signed the MoU on behalf of Bank Islam, while Sarawak Energy was represented by group COO Lu Yew Hung and SJPP by GM Azlan Mohd Agel.

The signing ceremony was witnessed by Bank Islam head of East Malaysian region Abdul Malek Abdullah, Sarawak Energy legal GM Stephanie Gae Chin and SJPP senior manager Juanita Rusmini Abdul Jalil.

Ahmad Haliman said: “Bank Islam has been taking an aggressive approach in encouraging projects that exemplifies our value-based intermediation mission, including providing financing with a positive impact on the economy, community and the environment. In supporting Sarawak Energy’s Vendor Financing Programme, Bank Islam can assist vendors with small contracts to gain access to financing that will help them execute projects awarded by Sarawak Energy or its subsidiaries according to schedules.”

As part of the initiative, SJPP, a wholly owned agency under the Ministry of Finance, will act as the credit guarantee provider. SJPP will support the programme by providing up to 70% credit guarantee to eligible vendors.

“This exciting collaboration will broaden the bank’s business market as the contracts awarded by Sarawak Energy will be financed under the Vendor Financing Programme. With total contracts awarded by Sarawak Energy of more than RM500 million a year, Bank Islam is in a better position to help the vendors access the capital they need to strengthen their business capacity and capabilities.

“Bank Islam is proud to be partnering Sarawak Energy and SJPP in embracing the government’s initiative in promoting greater energy sustainability in the country, at the same time contributing to Sarawak’s need for reliable and renewal energy in achieving sustainable growth and prosperity,” Ahmad Haliman added.

Bank Islam is committed to being part of the financial ecosystem in providing business solutions and adds value to Sarawak Energy’s Vendor Financing Programme vendors.

The bank also takes great pride in its innovative approach towards client servicing by offering the most extensive network coverage and capabilities in meeting the energy sector requirements. The partnership with Sarawak Energy and SJPP is hoped to further catalyse Malaysia’s green technology initiatives for a sustainable future.

Renewables

German companies consider investing in local solar sector

6 November 2019

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Cambodia

A host of companies from Germany showed interest in Cambodia’s clean energy sector during a conference on solar power held yesterday in Phnom Penh.

For in depth analysis of Cambodian Business, visit Capital Cambodia
.

With the government having recently unveiled its goal of having 20 percent of locally-produced energy come from solar farms, the sector is attracting an increasing number of foreign players.

During yesterday’s conference on industrial and commercial solar energy, held at Raffles Hotel in Phnom Penh, several German companies introduced their products and services to the government, NGOs, and factory owners.

The event was organised by the Delegation of Germany Industry and Commerce in Myanmar (AHK) and supported by the GIZ Project Development Program, the Global Business Network, the German Business Group Cambodia, and the European Chamber of Commerce (Eurocham).

The conference aimed to promote renewable energy and energy-efficient technologies, showcase sustainable energy solutions, and contribute to climate protection, the organisers said.

German firms Enebar, Dhybrid, 21st Century Clean Energy and 4i Capital, among others, were represented at the event.

The conference is part of the German Energy Solution Initiative – Energy Solutions Made in Germany, a programme supported by Germany’s Federal Ministry for Economic Affairs and Energy.

Christian Berger, German Ambassador to Cambodia.
KT/Siv Channa

Participants at the conference discussed the Kingdom’s renewable energy policy and mostly focused on the opportunities and challenges to develop the sector.

Martin Klose, delegate of AHK Myanmar, said the conference will open the door for Germany to increase investment in Cambodia.

“We have been tasked with promoting German trade and investment in Cambodia, so we are holding a lot of events in Germany to raise awareness about Cambodia and put the Kingdom in the map of German investors,” Mr Klose said.

AHK Myanmar represents German trade and investment in Cambodia, Laos, and Myanmar.

Victor Jona, director-general of energy at the Ministry of Mines and Energy, told reporters that the government welcomes all investors looking to develop projects in the solar sector.

“We support these initiatives because clean energy like solar power does not harm the environment. The government is working to promote these types of investment,” Mr Jona said after the conference.

Mr Jona touted Cambodia’s potential in solar, pointing out that the Kingdom has a very high number of peak sunlight hours.

According to Mr Jona, with only two solar farms in operation, Cambodia generates 90 megawatts from solar. However, by 2022, seven new solar facilities will be running, bringing that figure up to 410 MW.

Energy Economy

Are Thailand’s investments abroad sustainable?

6 November 2019

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Thailand

Although Prime Minister Prayut Chan-o-cha announced Thailand’s commitment to the United Nations Guiding Principles on Business and Human Rights (UNGPs) in 2017, outbound investment remains a largely unregulated sector.

Thai firms are significant investors in ASEAN countries, and Thailand’s foreign direct investment (FDI) in the region stood at US$2.37 billion in 2017 – behind only Singapore (US$18.75 billion) and Malaysia (US$3.99 billion).

Thai companies also have a vast reach. The Siam Cement Group, for example, has more than 90 subsidiaries operating in ASEAN outside Thailand – and more than 55 of them operate in Cambodia, Lao PDR, Myanmar and Vietnam. Another Thai conglomerate, the Charoen Pokphand (CP) Group, has farming, food and telecommunications interests throughout the region.

THAI FDI IN ASEAN — Source: ASEAN Secretariat

Short-term profit

However, some Thai firms have taken advantage of weak investment laws in neighbouring countries by developing large-scale projects which have led to environmental degradation or human rights abuses such as land grabs.

While these projects would probably have not got off the ground in Thailand due to opposition from local communities or restrictive national requirements, ASEAN’s failure to provide a regional regulatory framework for social and environmental investment standards has also played a part in these companies’ continued focus on short-term profit over long-term sustainability.

Although environment, social and governance (ESG) is a relatively new concept in ASEAN boardrooms, some 89 percent of the 140 large investors, asset owners and asset managers polled at an investment forum in Thailand last month said that ESG-integrated investment portfolios are likely to perform as well, or better than, non ESG-integrated portfolios.

Energy needs in ASEAN have risen in tandem with its population and economy, and while Thailand has capitalised on this by developing a variety of projects in neighbouring countries, many of them have been criticised for failing to meet ESG standards.

The National Human Rights Commission of Thailand (NHRCT) found that of the 2,119 complaints received concerning adverse business-related human rights impacts from 2001 to 2018, the three most frequent complaints were the adverse effects of environmental pollution on human health, forced evictions of communities with no or inadequate compensation, and lack of or inadequate public consultations with communities affected by large-scale development projects.

Land grabs and coal

The Dawei Special Economic Zone (SEZ) in Myanmar, Koh Kong and Oddar Meanchey sugar plantations in Cambodia and the Hongsa Mine and Power Station in Lao are partially owned by Thai investors – and they have all come under fire by local communities and other stakeholders for land grabs.

Non-governmental organisation (NGO) EarthRights International has noted how 456 Cambodian families from three villages were forced out of around 5,000 hectares of land to make way for a sugar plantation in Cambodia’s Koh Kong province, while petrochemical industries have polluted local water supplies in the Dawei SEZ.

Coal projects in the Mon and Kayin states in Myanmar, the Koh Kong province in Cambodia, and both East and South Kalimantan in Indonesia have also been blamed for their impact on the environment. Just last month, the Philippines’ opened a coal-fired power plant in Quezon – a joint venture between the Philippines’ Meralco PowerGen Corporation (MGen) and Thailand’s EGCO Group.

Although coal is a cheap way to power ASEAN’s growing energy needs, it is by no means clean. In Thailand for the recent ASEAN Summit, United Nations Secretary-General António Guterres said that Asia has an “addiction” to coal and called for a halt in new coal-fired power plants.

Greater awareness

While Thai firms undoubtedly have a key role to play in ASEAN’s economy, they are slowly realising that increasing the wealth of shareholders can no longer overshadow the long-term goals of social harmony, inclusive growth and sustainable development centred on ESG.

In August, the Bank of Thailand, the Thai Bankers Association and 15 Thai banks agreed on a set of guidelines which takes ESG criteria into account.

For the Government Pension Fund of Thailand (GPF), their ESG-focused portfolio posted a 10-month return of 4.6 percent, outperforming its main equity fund by 50 basis points according to Stock Exchange of Thailand Governor Seree Nonthasoot in a recent interview with a regional trade journal.

During a panel discussion on Lao PDR’s controversial Xayaburi dam on 22 October, Sarinee Achavanuntakul – founder of Sal Forest, a corporate sustainability research firm – said that Thai bankers are now no longer merely repeating borrowers’ promises that proper environmental and social impact assessments were conducted – and heeded – before the start of projects.

Financed by six Thai banks in an investment Sarinee said was a “no-brainer” for the average Thai banker, the newly-operational dam has been blamed for contributing to historically low water levels on the Mekong river.

“During the Sustainable Banking Forum in August, bankers from Kasikornbank and Siam Commercial Bank – two of the dam’s lenders – conceded they may need to look at more standards when financing hydropower projects,” said Sarinee, a former banker herself.

“A senior banker said he was not sure if the drought was related to the dam but said it was a controversy they had to look into.

“You may think that’s not saying much, but… It’s a move in the right direction.”

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PV ambitions of Central Asia’s most populous state

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