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Interview

Nicky Gemperle, President, Pöyry Energy Inc. Philippines

Nicky Gemperie, President of the consultancy and engineering firm Poyry, offers his thoughts on the respective futures of biomass and natural gas on the local market, the challenges of securing bank financing for unconventional energy forms, and the complexities of logistics and collection across the archipelago.

Despite the buzz, clean tech funds worldwide haven’t yielded the expected results yet, and some say that the global dash for gas will affect investment in renewable energy. As a leading international consulting and engineering company that professes that a green attitude is by no means at odds with business objectives, what is Pöyry’s perspective?

In the Philippines, gas will take a while to arrive, but at the same time, renewable energy has its own problems, particularly regarding legislation. To my understanding, Meralco Power Gen is the only one who can really go forward with gas, because they have the off-take market. In any case, if we follow the price of gas today, I don’t see the numbers. I don’t see how they can make net profit—not in the Philippines, and not against coal. It will take at least three to five years before we start seeing a considerable advance in that direction.

In 2011, Heikki Malinen, Pöyry’s CEO was quoted saying that “the long-term outlook for investments in emerging markets is robust. Asia’s share of Pöyry’s total business needs to be further increased. How important are the Asian markets for Pöyry today, in terms of revenue?

The Asian markets are extremely important, with the best performance in the world for the company in recent years. “La crème de la crème” you find here. Two countries are winning the race of importance: Thailand and the Philippines.

How have Pöyry’s projects evolved in the Philippines since the 1990’s?

Looking back, we entered the Philippines back in 1992 under Swiss owners, and in 1997 became a Finnish company. For clients—Nestle and cement factories like Lafarge—we provided O&M services for diesel power plants on an outsource basis. We did this for a few years, and although it was not extremely lucrative, it paid the rent and the salaries and most importantly, allowed us time to go for the “big projects” – EPC contracts. We also did feasibility studies and engineering design.

Currently, in Pöyry Philippines we work more on consultancy projects than anything else. The last EPC contract we had was with the Zabaleta family of Bronzeoak. Actually we are developing a new project with them again. But most of the work we are doing now in the Philippines is owner’s engineer and lender’s engineer, working for the banks on many coal-fired power plants. Moreover, at the same time, we are working on three wind projects and two solar projects. We do also work for a Singaporean company that is putting up a bioethanol plant in Cavite.

In 2007, Pöyry was awarded a contract to provide project management and construction services, as well as balance of plant to the San Carlos Bioenergy plant, the first bioethanol plant in the country.  What were the main challenges that you faced?

Indian equipment! Today, the project has already been commissioned and has been working online since 2010. The project had its bad years, due to a number of unfortunate circumstances: the first year of operations was the year that the price of sugar was the highest that it has been in the Philippines since the Second World War. But they turned it around, and full credit is due to the Zabaletas for this achievement.

Where does the San Carlos BioEnergy project stand today? And what do you believe working on Asia’s first sugar to ethanol plant brings to your portfolio?

The San Carlos BioEnergy project served as a catalyst for new renewable energy contracts in the Philippines. We were the first company to build a bioethanol plant in the Philippines. It was our platform and communication base. From that project, everybody came to us, which is both good and bad. The difficulty with the EPC projects is that they take long to bring to fruition. We took the role of contractor. In the years that followed, I had six biomass projects on my desk, at least: rice, coconut husk, sugar “bagas”, and so on. But most of them weren’t going anywhere. Why? My impression of biomass in the Philippines is that there is a difficulty in getting financial support from the banks, which are very conservative and in biomass, the name of the game is logistics and collection. Combine that with the major deficit in our archipelago: infrastructure and we don’t even know from where to start. Moreover, the technology that was required was not the appropriate one. To summarize, biomass projects have been really hard to finance and this is why, as I mentioned before, I come back to my respect for the Zabaletas, since they were able to consistently find solutions.

Collaborating with local partners is one of the most important factors for successful operations in Asia and is where many foreign investors fail. Why was Bronzeoak Philippines the best choice for Pöyry Energy back in 2007? And on the other side, what did your company bring to the table for Bronzeoak?

Our work relationship with Bronzeoak has always been very good. It is a funny and curious history as I met the Zabaletas through my sister at an informal dinner. We were eating and speaking about what Bronzeoak was doing, what Pöyry was doing, and we came to the point that we realized we should be working together. Bronzeoak asked our help for technical advice. We have many people that are very good at what we call ‘power economics.’ They are not only technical, rather they give you the dollars and even more, the sense of what it will mean to build the plant. It is not just “you can do this or that;” it is saying, “if you do this it will cost you that”. It is also about logistics, about the environment, and so on. Our help is exactly what they needed at that time.

There are a number of Asian EPC and service providers that have successfully infiltrated the Philippines power market, primarily Korean and Japanese companies. What is Pöyry’s competitive edge?

Pöyry has been in the Filipino market for a very long time, including the bad years, and we have survived. We haven’t left and we won’t ever leave. The commitment to the Philippines is our competitive edge. Today, the competition is tougher, as everybody is setting up an office in Manila, but we were here before.

Where would you like to see Pöyry Energy Philippines in five years?

I would like to see Pöyry Philippines more as a contractor than as a consultant. Today our business is 20 percent contractor versus 80 percent consultant. To turn this over is my dream and my objective. That would quintuple our revenues.

As a final message to our international readers, what statement would you like to make on behalf of Pöyry Energy?

Pöyry is good at what it does because people know that we are good at what we do. That is because we stick around. This ‘boom’ is not going to last forever but we are going to continue working in the Philippines no matter what.

 

To read more interviews and articles on the Philippines, and to download the latest free report on the country, click here.         

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