EDC to invest $157m in geothermal upgrades in 2011

EDC to invest $157m in geothermal upgrades in 2011 Bacon-Manito geothermal power plant, Philippines (source: First Gen Corp.)
Alexander Richter 30 May 2011

First Philippine Holding is ten-folding its investments in 2011 over 2010 numbers, planning to spend at least US$157 million on upgrades to its geothermal operating unit EDC.

Reported from the Philippines, First Philippine Holding (Lopez Group) is “allotting some P8.5 billion (US$ 196 million) mostly for its geothermal operating unit Energy Development Corp. (EDC) and the balance to expand First Philec Solar Corp.’s factory for solar panel components, Elpidio L. Ibañez, president and chief operating officer of First Holdings, told reporters after the company’s stockholders’ meeting.

The 2011 figure is a substantial improvement from the P700-million to P800-million (up to US$18 million) estimated capital spending in 2010, according to Mr. Ibañez.

Of this, P6.8 billion (US$ 157 million) is “programmed to rehabilitate and expand steam fields and power plants,” Richard B. Tantoco, president and chief operating officer of EDC, told reporters.

In May last year, EDC, through Bac-Man Geothermal, Inc., won the auction for the 150-megawatt Bacon-Manito geothermal power plant in Bicol with an offer of $28.25 million.

The plant will come online in the third quarter, Mr. Tantoco said.

To date, the company has a generating capacity of 2,800 megawatts, which will be increased by another 130 megawatts through the Bac-Man plant.

Forty million dollars or P1.735 billion will meanwhile be spent to expand the First Philec’s solar wafer-slicing facility, Mr. Tantoco added. The subsidiary wants to start commercial operations of this new 400-megawatt wafer-slicing facility by the third quarter, he said.

Funds will come from the P23.6-billion combined gain the conglomerate realized from the sale of its 6.6% stake in Meralco to Pangilinan-led Beacon Electric Asset Holdings, Inc., Mr. Ibañez said.

But rehabilitation works will result in lower profits, the executive said.

“As we pursue growth in our power generation, property and manufacturing businesses, our recurring earnings will be negatively affected in the short term,” Mr. Ibañez said.

The expected decline in earnings will be “maybe a third,” he said.

Last year, net income attributable to equity holders of the parent firm surged to P24.85 billion from P8.731 billion in the previous year.

“I think we could expect things to improve in 2012. 2011 is a transition year, a time to invest,” Mr. Tantoco said.

Aside from EDC and First Philec Solar, the Lopezes also hold stakes in Manila Electric Co., First Gen Corp. and Rockwell Land.”

Source: Business World Online