Philippine National Oil Company: Energy Development Corporation

• Main Author: Que, Anne Katherine O.
• Format: text
• Language: English
• Published: Animo Repository 1998
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2238
• Institution: De La Salle University

PNOC Energy Development Corporation is a government owned and controlled corporation engage in the exploration and development of geothermal energy. It was created in 1976 through PD 927 in response to the oil crisis experienced in the 70s. The company currently operates eight geothermal projects in the islands of Luzon, Leyte, Mindanao and Negros with a total installed capacity of 1,832 MW. It currently plans to develop an additional 220 MW of capacity before the year 2005. The financial crisis that plagued the country in the second half of 1997 was a big blow to the company considering the substantial BOT payments that it need to make and the level of foreign denominated loans it needs to service. The company project s that before the year ends, it will require a substantial amount of cash to sustain its operations. Out of the 220 MW programmed projects for completion, only the development of the 50MW Mindanao II may be viable for the company as of now. Thus, several financing options will be made available to avoid bridge financing during the year 1998-2005. The companys strengths and weaknesses, as well as opportunities open for them will be reviewed in this paper. Corollary to these, all possible environmental changes that threatens the company will also be identified. One of these threats is NPCs estimate of an additional 88 MW only in installed capacity coming from the geothermal sector. This is due to the increasing share of coal and natural gas in the power mix. The company, thus, needs to make use of its competitive advantage and identify several alternatives that will enable them to maintain, if not surpass, its eminent standing in the geothermal sector. Future options for the company will have to be tackled in anticipation of these events.