PGPC acquisition accelerates SM Group’s sustainability goals

MANILA, Philippines — The SM Group’s acquisition of a 100 percent stake in Philippine Geothermal Production Co. Inc. (PGPC) will help the country’s biggest conglomerate meet its sustainability goals, including a major shift to renewable energy.

Mall and property developer SM Prime Holdings Inc. is targeting to source half of its energy requirements from renewable sources by the end of the year, SM Investments Corp. (SMIC) president and CEO Frederic DyBuncio told The STAR.

“PGPC will certainly help SM in meeting expectations for actions on sustainability like SM Prime’s commitment that half of its energy would come from renewable sources by end of 2022, similarly with BDO that has funded 54 renewable energy projects nationwide,” DyBuncio said.

The acquisition of PGPC, however, does not mean a major diversification to energy for the SM Group, he said.

“Our interest in the asset is because of its renewable nature and is aligned with our sustainability initiatives, DyBuncio said, noting that PGPC is not involved in actual power generation, but instead develops and operates the steam fields, which it then sells to a power generator.

“There are no plans for other acquisitions in the pipeline, as PGPC currently has several other concession areas it is developing,” he said.

Early this month, SMIC said it would raise its stake in PGPC, which operates the Tiwi and Mak-Ban steam fields in Albay, Laguna and Batangas. This would be done through the issuance of 17.4 million shares at P903.88 per piece worth P15.7 billion to PGPC’s controlling shareholder, Allfirst Equity Holdings, in exchange for an 81 percent stake in the renewable energy company. This would bring SMIC’s stake in PGPC to 100 percent from 19 percent.

Tiwi, in Albay, is the first commercial-scale geothermal steam field development in Southeast Asia, followed by Mak-Ban in Laguna and Batangas, both in operation since 1979.

Together, they generate geothermal steam sufficient to produce approximately 300 megawatts of electricity.

In addition to its two producing steam fields, PGPC also has several other greenfield concession areas for geothermal steam production, which it will develop moving forward.

PGPC will be included in SMIC’s portfolio investments in future reporting.

Aside from SMIC’s core businesses of banking, retail and property, its portfolio of investments include logistics firm 2GO, bakery chain Goldilocks, and condo developer MyTown.