TWO ENTITIES participated in by Ayala and Aboitiz-led companies are seeking provisional approval from the Energy Regulatory Commission (ERC) for separate power purchase and sale agreement (PPSA) for two coal-fired power plant projects in Luzon.

GNPower Dinginin Ltd. Co. and Leyte IV Electric Cooperative (Leyeco IV) sought approval for an agreement covering 16 megawatts (MW) from the power plant it is building in Bataan.

Separately, GNPower Mariveles Coal Plant Ltd. Co. and Quezon II Electric Cooperative (Quezelco II) have applied for a power supply deal for 5 MW from a plant adjacent to that of GNPower Dinginin.

The ERC, which posted the applications last week, has set the pre-trial hearing for the two applications next month.

In the GNPower application, Leyeco IV said it receives 10 MW from existing suppliers out of its peak requirement of 12 MW. It forecast its peak demand for years 2017 to 2023 to hit 13.462 MW.

The agreement comes after the electric cooperative conducted the required competitive selection process along with other utilities to cover their combined projected demand.

Aboitiz Power Corp. last month secured the nod of the competition watchdog for its acquisition of a majority stake in GNPower Mariveles and a minority interest in GNPower Dinginin.

GNPower Dinginin is developing supercritical coal-fired power plant, with two identical units each, with a net capacity of 668 MW within a 61-hectare industrial property. It is expected to start commercial operations in 2019.

GNPower Mariveles owns a subcritical coal-fired power plant, including associated and auxiliary assets. The plant in Barangay Alasasin, Sitio Dinginin in Mariveles, Bataan consists of two units totaling 604 MW. It started operations in 2014.

In October, ERC granted provisional approval to the power purchase and sale agreements entered into by GNPower Dinginin and seven electric cooperatives in the Visayas, bolstering the future commercial viability of the company.

In granting provisional approval, the ERC said the final generation cost that could be recovered by the company would be determined in its decision.

Based on the terms and conditions of the PPSA, the parties plan to start delivery of power on Dec. 26, 2018. Part of the funds needed to build GNPower Dinginin’s facility will be sourced from the loans from banks, for which the provisional approval of the PPSA is a vital requirement for the release of the loan proceeds. — Victor V. Saulon

PHINMA Corp. is advancing its expansion plans abroad particularly in the education sector, where it targets an enrollment of 100,000 students within the next three to four years.

“We continue to look for more schools to acquire and we continue to experience very robust growth in the schools that we’re in,” Phinma President Ramon R. del Rosario, Jr. told reporters after the company launched its 60^th anniversary celebrations in Makati City last Wednesday.

The listed holding firm currently operates five schools: Phinma Araullo University, Phinma Cagayan De Oro College, Phinma University of Pangasinan, Phinma University of Iloilo and Southwestern University.

“It’s all over the past 10 to 12 years only that we’ve built up our portfolio of schools. And now we have five schools — four universities and one college — and our total enrollment is now about 54,000 students,” Mr. del Rosario said.

Phinma had targeted to have five schools when it ventured in the education sector, Chairman Oscar J. Hilado told reporters on the sidelines of the same event.

“We already have that — and I think we are going to go beyond that — but in terms of enrollment, we’re looking at 100,000 students,” Mr. Hilado said, underscoring the need to continue expanding its portfolio of schools.

“We will do that in the next three to four years,” Mr. del Rosario said. “We’re even exploring — as you may know, we’ve begun to expand outside of the Philippines.”

Phinma opened its first training center in Myanmar in August 2016, offering care-giving courses in partnership with Victoria Hospital, one of the largest private health care service providers in the Southeast Asian country.

“I think we have 40 or 60 students at the start but that’s just to get our feet wet, learn about the licensing process and just also learn the rope so we’re doing it slowly,” Mr. del Rosario noted.

Phinma is looking at developing the training center into a nursing college within the next three years and eventually establish a university offering other courses like accounting and engineering.

“We’re starting in Myanmar because we had a good fortune of having ourselves introduced to a group there that shares our vision,” Mr. del Rosario said. “They’re very strong in terms of real estate — they have a lot of real estate properties — so, maybe in Myanmar we will end up starting schools from scratch.”

Aside from Myanmar, the listed company is considering entering Vietnam although no serious efforts have been made at present.

“So, that’s going to be part of the expansion. But here in the Philippines, we continue to look for opportunities but there are many groups now looking for schools also so they’ve become more expensive but this is good for Philippine education,” Mr. del Rosario said.

“I think it’s good that Philippine business gets involved. At least responsible Philippine business getting involved in education, I think, is an excellent development because it makes available not only the resources but the expertise of the business community.”

Mr. Hilado cited the flagship K to 12 education program of the previous administration, which extended the country’s basic education curriculum from 10 to 12 years, among the drivers of Phinma’s education business in recent years.

“I think the K-12, while it was looked at as a serious challenge to universities, also opened up opportunities for rapid expansion. We established senior high schools in our universities,” the Phinma chairman said.

Phinma is expanding its hotel operations overseas alongside the education business. To date, it operates 18 properties under the brand Microtel across the Philippines and continues to scout for expansion opportunities in Palawan and Bohol, among others.

The company plans to bring Microtel into Myanmar through franchising and targets to break ground for its first hotel there within the next 12 months.

“In the discussions we’ve had, they will also put them in sites of economic zones where there are factories etcetera. Our Batangas property, our Cavite property — some of our properties that have quite done well are in those industrial zones, for business, for consultants, for locators, etcetera,” Mr. del Rosario noted.

Asked what makes Myanmar an attractive market for the company, Mr. del Rosario said: “They just have moved from pure dictatorship to a new democracy that is emerging. And we think that when there’s a new democracy and they open up the economy, there are opportunities that come up.”

“There are also a lot of poverty still and it is quite underdeveloped so we have the chance to be sort of a first mover. So, we think the opportunities are there but the challenges are also there,” Mr. del Rosario added.

In the first nine months of 2016, the listed company booked a 49%; year-on-year increase in consolidated net income to P428.7 million. The improvement reflects a 15% jump in revenues to P4.8 billion, as subsidiaries Union Galvasteel Corp. and Phinma Education Holdings, Inc. grew their income by 10% to P3 billion and by 18% to P1.5 billion. — Keith Richard D. Mariano

Phinma Corp. President Ramon R. del Rosario speaks during the company’s 60^th year celebration at the Fairmont Hotel, Makati on Jan. 18. — BERNARD TESTA/INTERAKSYON.COM

THE Energy Regulatory Commission (ERC) has approved the application of Alsons Consolidated Resources, Inc. to build a transmission facility that will connect its power plant in Maasim, Sarangani province to the Mindanao grid.

In a decision this month, the ERC set conditions for Alsons subsidiary Sarangani Energy Corp. to connect the second phase of its coal-fired power plant to its power substation to the facility of the National Grid Corporation of the Philippines (NGCP), the privately held system operator.

The conditions include giving the authority to operate and maintain the dedicated point-to-point transmission facilities to the NGCP, subject to applicable charges. The line should also be developed and built within an approved system impact study and facility study to avoid the degradation of NGCP’s transmission system.

“Any portion thereof required for competitive purposes or connect to any other user, ownership of the same shall be transferred to TRANSCO [National Transmission Corp.]/NGCP at fair market value,” the ERC said.

The ERC’s approval comes as Mindanao’s electricity demand is projected to increase at an average annual growth rate of 4.57%, which is said to be highest growth rate among the country’s three grids.

“Its peak electricity demand of 1,407 MW [megawatts] in 2012 is seen to increase to 2,068 MW in 2020, and will increase further to 3,259 MW in 2030,” data on Sarangani Energy’s application show.

The company noted that the Mindanao grid “has been experiencing under generation since 2010. This is expected to continue, if not worsen, if the rapid growth of the region’s electricity demand is not met.”

In July last year, Alsons has awarded the contract to build the second phase of its Sarangani coal-fired power plant to Japanese company JGC Corp. This is the second half of the 210-MW project being undertaken by the Alsons subsidiary.

In April 2016, the first 105-MW section of the plant started operations. It provides baseload power to more than three million residents of the province, General Santos City and other key areas of Mindanao.

Alsons has said that the $570-million power plant was the “single largest investment” in Sarangani and the whole of Soccsksargen or Region 12.

Alsons holds 75% of the subscribed capital of Sarangani Energy, while Japanese company Toyota Tsusho Corp. owns the rest. — Victor V. Saulon

The first 150-megawatt section of Sarangani Energy Corporation’s 210 MW coal-fired power plant in Maasim, Sarangani province started operations in April 2016. — ALSONS CONSOLIDATED RESOURCES

By Imee Charlee C. Delavin,
Senior Reporter

TELECOMMUNICATIONS companies renewing their legislative franchise can expect to get the same perks granted to other telcos, according to the chairman of the House Committee on Legislative Franchises, as the government seeks to further level the playing field in the industry.

The House of Representatives recently approved the measure extending the franchise of Smart Communications, Inc. by another 25 years. The bill introduced several amendments to Republic Act 7294, which originally granted Smart a 25-year legislative franchise in 1992. Smart’s franchise is due to expire this March.

“As to the application of the same privileges — under Section 23 of RA 7295 (Public Telecommunications Policy Act of the Philippines) — there is an equality treatment in the telecommunications industry,” House Committee on Legislative Franchises Chairman and Palawan Rep. Franz E. Alvarez (1^st district) said in a mobile phone reply when asked whether Congress will grant similar incentives to other telco firms renewing their license.

Section 23 of the Public Telecommunications Policy Act states that “any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises: Provided, however, that the foregoing shall neither apply to nor affect provisions of telecommunications franchises concerning territory covered by the franchise, the life span of the franchise, or the type of service authorized by the franchise.”

Mr. Alvarez said Congress conducts hearings to determine if the telcos are “fit to operate” and “compete in the telecommunications industry which the state has declared to be a healthy competitive environment.”

“The grant of such equality treatment is part and parcel of that environment, provided the public has benefitted and the applicant has to show that it is fit to operate,” he added.

Under House Bill (HB) 4637 — which extended the franchise of PLDT, Inc.’s wireless unit — Smart will be exempted from paying Customs duties, tariffs and taxes on radio telecommunications and electronic communications equipment.

A new “equality clause” was also added to Smart’s legislative franchise which will allow the company to enjoy future incentives that will be granted to new players.

“If any franchise for telecommunications services awarded or granted by Congress of the Philippines or any amendment or revision to any franchise for telecommunications services, subsequent to the approval of this Act, provide terms, privileges, exemptions, exceptions and conditions that are more favorable and beneficial than those contained in or otherwise granted under this Act, then the same terms, privileges, exemptions, exceptions, or conditions, shall, ipso facto, accrue to the herein grantee and be deemed part of this act,” the equality clause read.

Mr. Alvarez said exemption from Customs duties was given “to provide equality” since Smart committed to further improve its services, and the same incentive was already given to another telco firm.

“These were already given to another franchisee, Bell Telecommunications. To provide equality, and upon the express and categorical undertaking of Smart that it will improve its service, it was decided to give them as well,” he added.

The equality provision is also “not new”, as it is already found in the franchises given to San Miguel Corp.’s Bell Telecommunications, as wellas Bright Star Broadcasting Network Corporation.

Smart’s original franchise also required it to make a public offering of at least 30% of its authorized capital stock in any securities exchange in the country within two years from the measure’s effectivity. This was amended however under HB 4637 — which the lower house already forwarded to the Senate — by adding the phrase: “unless the grantee is wholly owned by a publicly listed company.”

“Smart was not exempted from public offering. Under its old franchise, it was required that at least 30% of its ownership be offered to the public. As a wholly owned corporation of PLDT, which is publicly listed, Smart substantially complied with this requirement,” Mr. Alvarez explained.

“The grant of the exemptions foster healthy competition in the telecoms industry which will in fact persuade potential investors in the market.”

Smart declined to comment the franchise extension.

Ayala-led Globe Telecom Inc., meanwhile, could opt to seek the same package once it renews its franchise.

“Globe is not due yet [but] we will keep our options open,” Yolanda C. Crisanto, Globe senior vice-president for corporate communications said in a separate text message.

Luis A. Limlingan, managing director of Regina Capital Development Corp., said the provisions will help Smart — and other telco firms to better compete.

“Given how competitive the industry already is, even at a duopoly, and given the ever changing technology and low switching costs of users, these provisions should help Smart should it get final approval from the Senate… Other players wanting to break this same duopoly or its main rival Globe will probably seek the same or even more incentives looking forward,” he said.

News reports earlier said Smart asked the House of Representatives to exempt it from paying local taxes, citing the 25-year franchise it gave to Bell Telecommunications — whose franchise is valid until mid-2040 — which contained such a privilege.

Smart failed to have its franchise extended in the previous Congress as the Senate deferred the adoption of the bill from the House of Representatives due to questions from some lawmakers, particularly the “standing objection” of then Senate Deputy Minority Leader Vicente C. Sotto III.

Senator Grace Poe-Llamanzares, who currently chairs the public services committee, was not immediately available for comment as of press time.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls.

AYALA LAND, Inc. is opening five more shopping centers within the year to remain on track in expanding its mall portfolio to 3 million square meters (sq.m.) of leasable area by 2020.

The listed company will bring around 192,000 sq.m. of leasable space online across five properties in Quezon City, Marikina City and Taguig City, Vice-President and Head of Ayala Malls Group Rowena M. Tomeldan told reporters in a Jan. 12 interview.

The five malls will follow Ayala Malls The 30^th, the first commercial development opened by the property giant near the Ortigas Center in Pasig City on Jan. 11. The property offers 28,000 sq.m. of dining, retail and entertainment options.

In April, the company will open Vertis, a shopping center with a leasable area of 40,000 sq.m., within the emerging business district along North EDSA in Quezon City, Ms. Tomeldan said.

Ayala Malls will then open properties spanning 13,000 sq.m. in Marikina Heights in May; 38,000 sq.m. in Cloverleaf, Balintawak in October; 79,000 sq.m. along Marcos Highway near the Rizal province in November; and 22,000 sq.m. in Bonifacio Global City in December.

In 2018, the company will open malls in the Bay Area and the Capitol Central in Bacolod, Ms. Tomeldan said, noting the timetable for the other projects in the pipeline remains fluid.

“By 2020, we will hit over 3 million square meters in leasable area by 2020 — that’s why we’re growing quite fast,” Ms. Tomeldan said, with the company’s portfolio spanning less than 2 million sq.m. to date.

The mall business of Ayala Land is opening smaller shopping centers in addition to the properties scheduled for opening this year and the next.

“If we include the small ones, there will be five more for this year because how this is done is we’re always part of a mixed-use estate, right? So, sometimes we also include the retail areas,” Ms. Tomeldan explained.

Ayala Land is expanding its recurring income base, with the view of eventually balancing its development and leasing portfolios.

In the first nine months of 2016, the commercial leasing business of Ayala Land grew 12% to P19.17 billion from P17.18 billion following the expansion of its malls, offices and hotels and resorts portfolios.

To date, the company has 1.57 million sq.m. of gross leasable area in its shopping mall portfolio, 753,000 sq.m. in the office segment and 1,991 rooms in the hotel and resort folder.

Ayala Land continued to source bulk of its revenues from the property development business in the first three quarters of 2016, after launching projects worth P49.2 billion. Income from the segment amounted 12% higher to P52.61 billion.

The property developer netted P15.06 billion during the period, a 17% increase from the P12.83 billion recorded a year earlier. Its stock price closed 30 centavos or 0.86% higher at P35.20 on the Philippine Stock Exchange on Friday. — Keith Richard D. Mariano

Ayala Malls The 30^th, which opened this month, is the property giant’s first commercial development near the Ortigas central business district in Pasig City. — AYALA LAND

THE Philippine Stock Exchange, Inc. (PSE) is working on widening access of smaller businesses to the equities market, with the creation of a separate board for start-up companies being proposed, among others.

The local bourse will explore possible reforms aimed at allowing more small, medium and emerging (SME) firms to go public, President and Chief Executive Officer Hans B. Sicat said in an interview.

For instance, the PSE can consider creating a separate board for start-up companies instead of loosening the listing rules and requirements further, Chief Operating Officer Roel A. Refran told BusinessWorld separately.

“I floated the idea of considering, for example, having a board that would allow more start-ups, but that has not reached the [PSE] Board yet,” Mr. Refran said.

At present, the PSE allows for the listing of companies with a minimum capital of P500 million on its main board. Those with at least P100 million, of which at least 25% must be subscribed and fully paid, may join the so-called Small, Medium and Emerging (SME) board.

“Other countries, like India, are very lax with SMEs but they only allow institutional buyers to buy and let the secondary market do its thing. Here, it’s different because we allow retail investors to invest in SMEs so we need to be a bit strict,” Mr. Refran said.

In this light, the PSE supposedly requires the smaller companies to present a track record. This requirement effectively bars start-up companies from accessing the equities market.

“So, the idea is to have a separate board for start-ups because a start-up, number one, really has no track record,” Mr. Refran said.

“I was thinking along those lines — maybe there would be merit because we see a lot of start-ups nowadays finding their home in Singapore. We want to attract them to do fund-raising here as long as the risks are communicated,” Mr. Refran added.

Setting up a separate board for start-up companies, however, remains beyond the sight of the exchange for now, Mr. Sicat noted.

“Probably not at the moment although we are trying to figure out how one can widen the rules — maybe a special board or special set of rules — but right now, we’ve only loosened up the rules in terms of renewable energy, PPP (public-private partnerships) listing,” Mr. Sicat said.

“We’re starting at the right direction,” the bourse official added, with the PSE targeting to launch within the year a mentoring program, in partnership with certain industry associations, to help SME companies advance their plans of going public.

Alterra Capital Partners, Inc., Italpinas Development Corp., Makati Finance Corp. and Xurpas, Inc. currently comprise the SME board. At least three others are seeking to join the list, namely gaming application developer Xeleb Technologies, Inc., restaurant operator Gweilo Corp. and technology firm Audiowav Media, Inc.

“I think one of the most important things for going public is you have a currency to acquire or a currency wherein you can borrow again. That’s where the value of being listed is just more than fund-raising,” Mr. Sicat noted.

A trader blows a horn as he celebrates the last day of trading at the Philippine Stock Exchange in Manila on Dec. 29, 2016. — AFP