Power producer First Gen yesterday reported it had bought out its foreign partner in a joint venture that won an auction for the government’s majority stake in geothermal firm PNOC-Energy Development Corp.

First Gen said that it acquired the 40 percent stake of Netherlands-based Spalmare Holding BV in Red Vulcan Holdings Inc. It did not give any financial details.

Spalmare, a joint venture between Icelandic firms Reykjavik Energy Invest hf and Geysir Green Energy ehf, however has the option to rejoin the consortium which it must exercise before the Feb. 28, it said.

Red Vulcan posted the wining P58.5 billion offer for the government’s 60 percent stake in PNOC-EDC in November.

PNOC-EDC is the biggest renewable power generating company in the Philippines.

First Gen’s success in buying the government stake was lauded by the market, boosting its share price.

First Gen in effect secured a clean, cheap source of energy for sister company, Manila Electric Co.

The remaining government shares covered by the transaction consisted of 7.5 B preferred shares, which were directly transferred to Red Vulcan, and 6 billion common shares, which were crossed at the Philippine Stock Exchange. This sale completes the privatization of PNOC-EDC, which started, with its successful IPO in December 2006.

PNOC-EDC accounts for 60 percent of the country’s installed geothermal capacity of 1,905 MW. With the acquisition of PNOC-EDC, First Gen will now account for 16 percent of the country’s total installed power generation capacity.

First Gen is the largest Filipino independent power producer with 1,836 MW of installed generating capacity.

Of the P58.5 billion acquisition cost $650 million came from the Development Bank of the Philippines (DBP) and ING while the balance was internally raised.

On the other hand, the state-run Philippines National Oil Co., (PNOC) claimed it earned a 55 percent premium in the sale which equivalent to P9.75 per share, or a premium of 55 percent over selling price of P6.30 per share.

PNOC-EDC has four existing geothermal production fields: Bacon-Manito Geothermal Production Field (150MW), Leyte Geothermal Production Field (701MW), Southern Negros Geothermal Production Field (192MW) and Mindanao Geothermal Production Field (106MW), totaling 1,149MW geothermal capacity.