EDC sets P14 B capex for 2016

By Danessa Rivera (The Philippine Star) | Updated March 14, 2016 - 12:00am
http://www.philstar.com/business/2016/03/14/1562597/edc-sets-p14-b-capex-2016

MANILA, Philippines – Lopez-led geothermal and wind energy company Energy Development Corp. (EDC) is setting a higher budget this year to increase the reliability of its aging facilities and for drilling projects.

The company has set a P14-billion capital expenditure this year, EDC CFO Nestor Vasay said in an interview last week.

The amount was higher than the P10- to 12-billion capex last year.

For this year, the company will address reliability issues of its Tongonan geothermal plant in Leyte to mitigate the loss in revenues, EDC president and chief operating officer Richard Tantoco said.

“Right now, the focus really is in Tongonon because last year, it cost us about P700 million in foregone revenues when it shutdown for six months. So we want to put investments in that to boost the reliability,” he said.

EDC hit a snag last year due to the Tongonan plant issues, which pulled profits lower by four percent to P8.8 billion from P9.2 billion in the previous year.

Tantoco said about P4.3 billion of the total budget would be spent for the rehabilitation of the three-unit, 112.5-megawatt (MW) Tongonan geothermal power plant.

“We already bought all the equipment from Mitsubishi two years ago. It will arrive fourth quarter this year and all the units will start shutting down one after the other,” he said.

The company head said rehabilitation of the Tongonan plant would take 145 days in total.

EDC took over the Tongonan plant, together with the Panlipinon plant, in October 2009 after it won the bidding conducted by the Power Sector Assets and Liabilities Management Corp. (PSALM).

Part of the 2016 budget would also be dedicated to the optimization of the 125-MW Upper Mahiao goethermal plant, Tantoco said.

“We’ve ordered new motors from GE and they’ll arrive from Chicago in third or fourth quarter of this year,” he said.

Drilling activities and the lookout for new renewable energy projects also form part of EDC’s projects this year.

“We are spending a little bit on our drilling,” Tantoco said.

“What we’re doing on the expansion projects, whether it’s overseas or solar, wind, or geothermal, regardless of what we are looking at... We are not stopping. We won’t really spend on drilling right now,” he said.

Tantoco said the 2016 capex would be funded through internally generated cash and refinancing with local banks in the second half of the year.

“Internally, we have close to P18 billion in cash right now. But we also have a major refinancing planned at the later part of this year which is close to P5 billion,” he said.