Philippines Power Report Q1 2013

BMI View: Regulatory concerns continue to slow the development of the Philippines' power sector; the current framework gives international firms little incentives to invest. The gap between supply and demand is very narrow, new capacity is slow to come online, and independent power producers are forced to deal only with distribution utilities (customers have to purchase electricity from them), creating a distribution monopoly. Key growth areas are renewable sources of energy, with feed-in-tariffs approved for the first time in July 2012, and there are many coal-fired power plants in the pipeline. Over the longer term, we expect generation and consumption to grow modestly, as the country experiences economic and population growth. We expect a substantial rise in gas production in the Philippines, and we predict that its share of total electricity production will increase from an estimated 37.7% in 2012 to 44.7% by 2021.

We forecast electricity generation in the Philippines will grow by 4.0% in 2012 compared to 2011 to reach 69.2 terawatt hours (TWh). Electricity generated by gas-fired power stations will be responsible for the majority of this growth, and natural gas will outperform the market as a whole, climbing by 7% in 2012 compared to 2011. Oil-fired power stations will see their contribution to electricity generation decline slightly, by 0.11% in 2012. Hydroelectric power continues to represent 15.2% of total electricity generation,
but a lack of rain has seen them operating at below capacity.

Between 2012 and 2021, we forecast growth in electricity generation to average 4.3% per annum,
underpinned by similar increases in electricity consumption. We expect to see the share of natural gas in total electricity generation increase from 37.7% in 2012 to 44.7% in 2021, as the country seeks to exploit its natural gas reserves and lower electricity generation costs. However, we highlight that the country's power situation will remain tenuous for the foreseeable future, due to the numerous challenges standing in the way of private investment. The government's Philippine Energy Plan 2012-2030 - due to be launched in December 2012 --- will outline power sector investment plans, and may encourage investors with a clear energy strategy for the country.

Key trends and developments in the Philippines' electricity market:

- The Department of Energy plans to launch its Philippine Energy Plan 2012-2013 in December 2012. The government has implied that this will contain measures to increase the production of fossil fuels, and will encourage private sector involvement to promote energy efficiency.

- Numerous plans for coal-fired power plants have been announced in recent months. These include Ayala's plans to develop a coal-fired plant in Iloilo province with the US-based Brown Group of Companies; Manila Electric Company's plans for two 600MW coal-fired power plants; and a third coal-fired power plant at Toledo City, to be developed by Global Business Power Corp.

- The Department of Energy decided to postpone the tender of 40-50 mini hydroelectric power plant sites in November 2012; the tender will now be launched in mid-2013.

Thanks partly to the forecast steady rise in net power generation, which falls slightly short of the underlying demand trend, we do not expect the Philippines to develop a significant power supply shortfall during our 10-year forecast period, with some scope for a limited generation surplus. We note, however, that in order to avoid any shortages or an import requirement, investment commitments need to be met in full. We expect better technology and more efficient distribution lines to result in an overall trend of lower transmission and distribution losses (from an estimated 12.3% in 2012 down to 10.5% in 2021). We do in fact see potential for exports in the long-run. SHOW LESS READ MORE >

BMI Industry View 7

Philippines Q1 2013 7

SWOT 9

Power 9

Industry Forecast 10

Philippines Snapshot 10
Table: Country Snapshot: Economic and Demographic Data 10
Table: Country Snapshot: Power Sector 10

Philippines Forecast Scenario 11

Electricity Generation And Power Generating Capacity 11
Table: Philippines Total Electricity Generation Data And Forecasts, 2011-2016 11
Table: Philippines Total Electricity Generation Long-Term Forecasts, 2016-2021 12
Table: Philippines Electricity Generating Capacity Data And Forecasts, 2011-2016 14
Table: Philippines Electricity Generating Capacity Long-Term Forecasts, 2016-2021 15

Electricity Consumption 24
Table: Philippines Total Electricity Consumption Data And Forecasts, 2011-2016 24
Table: Philippines Electricity Consumption Long-Term Forecasts, 2016-2021 25

Transmission & Distribution, Imports & Exports 26
Table: Philippines Electric Power Transmission And Distribution Losses Data And Forecasts, 2011-2016 26
Table: Philippines Electric Power Transmission And Distribution Losses Long-Term Forecast, 2016-2021 27

Industry Risk Reward Ratings 29

Asia Power Risk/Reward Ratings 29
Table: Asia Power Risk/Reward Ratings 33

Philippines Power Risk/Reward Ratings 33

Rewards 33

Risks 34

Market Overview 35

Key Policies And Market Structure 35

Regulation And Competition 35

Sustainable Energy Policies 37

Pricing 38

Philippines Power Projects Database 39
Table: Table: Key Projects 39

Competitive Landscape 46

Philippines Overview 46

Napocor 47

The National Transmission Corporation (TransCo) 48

First Gen 49

Aboitiz Power 49

Ayala Corporation 49

Mirant 50

Meralco 50

EDC 51

AES 51

Company Profile 52

First Gen 52

Regional Overview 56

Asia Industry Overview 56
Table: Vietnam's Power Development Roadmap 60

Glossary 62

Glossary of Terms 62
Table: Glossary of Terms 62

Methodology 63

Methodology and Sources 63

Industry Forecasts 63

Power Industry - Data Methodology 64

Generation and Consumption Data 64

Electricity Generating Capacity Data 65

Power Risk/Reward Ratings Methodology 66
Table: Power Risk/Reward Indicators 68

Sources 69

Company Profiles
ArcelorMittal
Alro SA
Mechel
Tenaris Silcotub