THE Department of Energy (DoE) terminated a service contract held by a power subsidiary of Nickel Asia Corp. (NAC) due to failure to make progress on a geothermal power project in Oriental Mindoro.
In a regulatory filing on Wednesday, NAC said that the DoE issued the final and irrevocable termination of the geothermal renewable energy service contract held by Mindoro Geothermal Power Corp. (MGPC), a wholly owned subsidiary of Emerging Power, Inc. (EPI).
The DoE revoked the contract covering the Montelago Geothermal Power Project, citing MGPC’s failure to comply with its commitments as indicated in the project’s approved five-year work program.
In 2014, MGPC acquired the exclusive rights to explore, develop and exploit geothermal resources at a field in Naujan, Oriental Mindoro, according to NAC’s 2024 annual report.
The company received approval from the DoE in 2019 to develop a 10-megawatt project to supply electricity to the Mindoro Island grid.
Last year, MGPC received a termination letter from the DoE covering the geothermal power project. The company requested reconsideration and submitted further documents, which the DoE accepted, laying down a five-year work program.
As a result of the re-evaluation, the company found that the well may not be economically viable due to low mass flow and limited power generation potential.
The group then booked provisions for impairment losses on the assets related to the geothermal exploration work.
On top of the contract’s termination, the company will also have to settle a financial obligation of $120,000 for training assistance.
“The termination of the service contract and the payment by MGPC of the financial obligation will not have a material impact on the Company’s financial situation,” NAC said.
EPI, the renewable energy subsidiary of NAC, aims to build 1 gigawatt worth of renewable energy capacity by 2028. — Sheldeen Joy Talavera