Energy Development Corporation

38th Floor, One Corporate Centre Building, Julia Vargas corner Meralco Avenue

Ortigas Center, Pasig 1605, Philippines

Trunklines: +63 (2) 667-7332 (PLDT) / +63 (2) 755-2332 (Globe)


May 27, 2014

JANET A. ENCARNACION

HEAD, Disclosures Department
The Philippine Stock Exchange, Inc. Philippine Stock Exchange Plaza
Ayala Triangle, Ayala Avenue, Makati City
Dear Ms. Encarnacion:

We write in compliance with the PSE's request for clarification as regard the news article entitled "Energy firm readies for Indon venture" posted in BusinessWorld Online on May 26, 2014. The article reported in part that:

"ENERGY DEVELOPMENT Corp. (EDC) is set to enter into a partnership this year for a 220-megawatt (MW) geothermal power project in Indonesia, officials of the Lopez-led firm told reporters yesterday.
Federico R. Lopez, chairman and chief executive officer (CEO) of First Philippine Holdings Corp. (FPH), said EDC is exploring several power projects outside the Philippines.
'We are looking at a number projects in ASEAN (Association of Southeast Asian Nations), in particular, I think, geothermal,' Mr. Lopez said on the sidelines of FPH's annual stockholders' meeting in Makati City.
. . . .
'In the context of ASEAN, where we would begin through investment in geothermal [projects] in Indonesia, we have a number of opportunities there that we're
pursuing,' said Francis Giles B. Puno, FPH's chief financial officer.
. . . .
Pressed for details, Mr. Puno said a project in Indonesia -- which will involve a geothermal plant with four 55-MW units -- is expected to advance this year.
'We hope by this year we would make some announcements on a joint venture,'
said the official, who also sits as First Gen's president and chief operating officer.
'We hope that by the second half, we can start pursuing more aggressively the
opportunities there.'
The 220-MW plant, Mr. Puno said, would entail investment of over $1 billion,
including EDC's share of 'around $200 million.'
But Mr. Puno said the company will initially take a minority interest in the project.
'They asked us to operate and maintain the plants, so that's our advantage. We are looking at a situation where we would have, at first, minority ownership but management control of the investment,' he explained.
'And then, over time, [we will] build that up so that we have majority ownership
and also management control.'
The same official said its potential foreign partner has already started drilling in the geothermal concession area.
'Our responsibility is to do further drilling and eventually construct and operate the plants,' Mr. Puno added.
The project is expected to be developed in two phases, with each segment involving two 55-MW power plant units.
MT. APO PROJECTS
In another development, EDC also intends to participate in the selection of the independent power producer administrator (IPPA) for the Mt. Apo 1 and 2 geothermal power plants in Mindanao.
'Yes, we will participate,' said Mr. Puno. 'We are the one operating the plant. It makes sense for us to also sell the capacity to the market.'
. . . ."
Energy Development Corporation (EDC) has a representative office in Jakarta, Indonesia looking for opportunities in the Indonesian geothermal industry. One of our subsidiaries, PT EDC Indonesia, was awarded a survey right for a site on the island of Sumatra in December
2012. PT EDC Indonesia recently concluded survey activities on this site, and the Indonesian
Ministry of Energy and Mineral Resources will use the survey results in preparing for the tender of the site's concession.
EDC is also having partnership discussions with a geothermal concession holder in Indonesia for a potential joint venture in one of their geothermal sites with an estimated capacity of around
220MW. The project, which will involve drilling of geothermal wells and construction and operation of the power plants, may be developed into several phases comprising two or more
power plants per phase with an estimated project development cost of around US$ 1 billion. The partnership remains subject to the completion of fully termed documentation and necessary regulatory approvals. As of this date, there is yet no definitive agreement executed relating to
this potential partnership as EDC still continues to negotiate the terms governing the development of the project.
On the Mindanao IPPA, we confirm that EDC will participate in the selection process still to be conducted.

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