Possible power glut won’t slow Alsons expansion in Mindanao

by Bloomberg November 12, 2015

http://www.mb.com.ph/possible-power-glut-wont-slow-alsons-expansion-in-mindanao/

Alsons Consolidated Resources, Inc. will proceed with a $920- million expansion to more than double its power generating capacity in Mindanao by 2019 even as the southern Philippine island faces a possible oversupply.

Alsons, the oldest electricity generator on Mindanao, has supply contracts for 90 percent of the combined 315-megawatt capacity of the three coal-fired power plants being built by the company, insulating the projects from a possible glut should all the new plants come on stream, Chief Financial Officer Luis Ymson said on Wednesday. The three power plants will raise the company’s generating capacity to 573 megawatts by 2019.

Mindanao, the nation’s second-biggest island and home to a quarter of the Philippines’ 108 million people, will have at least 1,860 megawatts of new capacity from 2016 through 2019 as Alsons and other companies including Aboitiz Power Corp., San Miguel Corp., Filinvest Development Corp. and Ayala Corp. complete their plans. Mindanao had 2,211 megawatts of installed capacity at end-2014, half of which are hydropower plants, according to government data.

“We don’t build plants unless we have off-takers,” Ymson said in an interview. “We have practically contracted all” the capacity Alsons is building. Alsons will start operating the first of its new three power plants in first quarter of 2016, while the construction of the other two plants will start in the second and fourth quarters, he said.

Alsons has hired ING Bank NV to arrange a 7.5 billion peso ($159 million) loan and is considering selling as much as 32 percent of the company, valued at about 3.16 billion pesos based on Alsons’ market value, to help fund expansion, Ymson said.

There are four groups seeking to acquire a stake in the company, he said, declining to name the prospective buyers. Direct stakes in the power plants may also be sold should that be preferred by investors, he said.

The company also plans to venture into hydro and solar power projects, which in five years could account for 10 percent of its generating capacity, Ymson said. It has contracts to build hydropower plants in Mindanao and central Philippines with a combined 90 megawatt capacity, he said.

Alsons is 80 percent owned by the family of Chairman Tomas Alcantara. The stock has declined 23 percent this year, after advancing 51 percent in 2014.