Not even sure where to start. Not inclined to go point by point....

Not even sure where to start. Not inclined to go point by point. But there is this:

https://www.bloomberg.com/gadfly/ar...ould-focus-energy-on-philippines-power-plight

Malampaya is a huge wildcard. End of contracts is not end of field life and whether or not there is an extension is a big question hanging over the sector. Field and fixed assets revert to Government in 2024, but most sensible people understand that it will be better to agree an extension; this would result in perhaps 5 to 10 years of additional supply, but at a lower plateau than today. Sufficient probable for the Malampaya plants to run during the day flat out and go to idle at night -- so in the mid-merit on an annual basis. But until the deal is done, there is no deal. In that case LNG might be needed for Batangas, but more recent technical work there suggests that a new build FSRU could be located there for $500 million including the vessel (about half that cost). Onshore in Batangas would be pricey but FirstGen's announced numbers are more like a billion. FSRU seems like a better choice. It does not happen because the policy and regulatory framework really is inadequate for recognizing the options value of having the ability to import LNG. Absent that, there is too much risk for private investors to take the plunge and not know how and when that capex can be recovered. They should have such a framework -- but the reality is, they do not. It brings to mind the old saying that markets can stay crazy longer than one can stay solvent.

New entrants have choices. Contracting with distribution companies is one choice. Entering the RCOA market might be another (difficult though). Competing in WESM is a third choice. But to select door #3, be low cost on a variable cost basis. The coal plants that have come on line or are under construction in the Philippines are largely contracted, in most cases with PSA's already approved by ERC. Capacity not contracted might wind up in the retail market or in the spot market. But the coal plants all have contracts associated with them, even if in some cases it does not cover the entire capacity of the plant. For operating capacity, costs are sunk, and most are covered by contracts anyway, at least for the medium term, so it is a variable cost game. And inefficient coal will beat efficient gas at the margin, when only variable fuel costs are considered -- this is not me being unbalanced, it is just a fact. Those plants are dispatched before, e.g, both FirstGen's merchant CCGT and its merchant OCGT.

The value of power generation in a market like this is the NPV of expected future revenue, with a suitable discount factor used in the NPV calculation. Not book value, not replacement cost, not historic cost. With a contract, that allows for capital recovery, that is one value; with full WESM exposure, it has to be modeled but there are scenarios in which capital recovery is not certain.