A Good Morning to all First Gen Stockholders.
Even as we recount another excellent operating year that was 2007, we turn an eager eye to a future full of challenges and opportunity. World fossil fuel prices are at unprecedentedly high levels and continue to trend upward. This notwithstanding, a steady supply of fuel, particularly for coal-fired power plants, has been difficult to obtain due to competition from other large users in the region and across the rest of the world. Our own demand and consumption of electric power continues to increase, driven by the country’s robust economic performance. We will soon be reaching capacity limitations in our ability to reliably generate electric power. Against this backdrop of soaring energy usage and soaring prices, we also face the growing threat of global warming and the pressure to switch to cleaner fuels and sources of energy that produce less carbon dioxide as a byproduct.
First Gen is uniquely poised to provide solutions to these challenges and exploit them, not as handicaps, but as opportunities. We are the cleanest and most efficient power producers in the country today. For our gas-fired turbine generating plants, we rely on an indigenous supply of clean natural gas. For our hydro-electric plants, we rely on a clean and renewable source of energy – water. With our acquisition of a controlling interest in PNOC-EDC, we can now aspire to become the leading producer of geothermal energy, not only in the Philippines, but in the world.
We believe that part of First Gen’s success is due to the mutual trust and confidence we have with the local governments, communities and various stakeholders where we operate our power plants. In compliance with Energy Regulation 1-94, we regularly remit one centavo-per-kwh to the Department of Energy. In the case of our Pantabangan-Masiway and FG Bukidnon hydro plants, 1% of gross revenues is remitted to the government in the form of Share in National Wealth Tax, accounting for the use of water in such facilities. At First Gen, we have gone a step further. In consultation and partnership with our various stakeholders, we have developed and implemented local programs that are focused on health, education, environment conservation and enhancement, and livelihood development.
First Gen’s growth and progress can be attributed to good governance as well as a disciplined and diligent approach to business. A strong synergy between management and dedicated employees, combined with an experienced Board of Directors, which include independent directors who are acknowledged business leaders in their own right, have given First Gen the extra boost needed in an industry that is currently in transition to a more competitive environment.
Along with this is the passing of the torch from one generation to the next. Peter D. Garrucho, Jr. who was First Gen’s CEO since 2002, handed over the leadership of the company to Federico “Piki” R. Lopez, effective January 2008. Until his recent appointment, Piki had held the position of President since 2000 and Chief Operating Officer (COO) since 2002. Peter will continue to be a member of the Board of First Gen following his retirement from First Gen’s parent company, First Philippine Holdings Corporation. We are grateful to him for his pioneering contributions to First Gen and we hope to be able to continue to benefit from his invaluable expertise and experience.
2007, indeed, marked a milestone for First Gen with the acquisition of 60% of PNOC-EDC, the second largest geothermal company in the world. The potentials and promise of this sunrise industry coupled with its significance in helping find environment-friendly fuels for power generation is something to watch out for.
As we navigate through the evolving landscape of the Philippine power industry, our success will be measured not just by the value that we create for our shareholders, but also by how our steadfast adherence to these values impact our nation. These values are our true north that will guide us as we bravely face new challenges and expand our horizons as the premiere Filipino energy company.