BASIC ENERGY Corp. is considering making an investment in a Hong Kong-incorporated company that has a portfolio of solar projects in Japan.
In a disclosure to the stock exchange, the listed company said its board of directors on Wednesday approved making a refundable earnest deposit in Solmax Power Ltd. to be able to conduct due diligence.
“After that deposit, that’s when we can effect due diligence,” said Anthony L. Cuaycong, Basic Energy senior vice-president, in a phone interview. “If the result is satisfactory, then we will commit to investing.”
Mr. Cuaycong said the company was looking at finishing due diligence “some time in the near term, most definitely before year end.”
The amount to be deposited was still under negotiation. “Once we firm up the figure we will be able to disclose,” he said.
The approval from Basic Energy’s board effectively marks the company’s foray into solar power development outside the Philippines, where its experience thus far had not been fruitful.
Mr. Cuaycong said Basic Energy did not have an amount set aside for its possible venture in Japan. He added the company did not have a target power capacity just yet, and that it would come up with details once it makes an investment decision.
“We tried looking at a local project,” he said, citing the company’s previous partnership with nv vogt Philippines.
In June last year, Basic Energy President Oscar L. de Venecia, Jr. said the company was looking at three of its own properties that could be developed into solar farms to bring an “immediate impact” on the bottom line.
Among the properties is a 178,634-square meter property in San Fabian, Pangasinan, which the company was considering for a solar energy project.
However, Mr. Cuaycong said the market for solar capacity had reached congestion in the Philippines, with the industry becoming more competitive.
He also said the industry faces a “big question mark” after pronouncements from the Energy department that it was not keen on giving out a third round of installation target with a corresponding guaranteed feed-in-tariff, a scheme previously resorted to by the industry policy maker to encourage investment in renewable energy.
At the same time, Basic Energy said its board approved the “cooperation agreement” between its unit PT BES for its Cepu, Indonesia project with PT Ekamaro, until Oct. 31, 2020.
Mr. Cuaycong said the gas concession agreement began in 2012 and is set to expire in October. He noted the board approval is essentially an extension of the deal by another three years.
On Thursday, shares in Basic Energy closed 3.92% higher at 26 centavos.
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