November 1, 2019 | 12:07 am
MERALCO
PowerGen Corp. (MGen) is expected to swing to profit next year with the full
operation of its first power generation plant, reversing the losses that it had
incurred after the delays encountered by some of its projects.
“MGen I think taken as
a whole will be profitable next year, so that’s the good news,” Manuel V.
Pangilinan, chairman of MGen’s parent firm Manila Electric Co. (Meralco), told
reporters when asked about the prospects of the energy generation arm of the
distribution utility.
Asked about how he
would quantify the profit expectation for MGen, he said: “We have an idea. I
think the board has still to see the budget, which is being finalized by
management so we should present the budget Nov. 25.”
MGen formally
inaugurated on Oct. 15, 2019 its P56.2-billion San Buenaventura Power Ltd. Co.
(SBPL), the country’s first supercritical coal-fired power plant, which now
provides additional supply to the Luzon grid.
It describes the plant
as the country’s “most advanced coal plant using a high efficiency, low emissions
coal technology that allows operation at increasingly higher temperatures and
pressures to reach higher efficiencies, while significantly reducing emissions.
In September, Meralco
secured provisional authority from the Energy Regulatory Commission (ERC) to
start operating the 500-megawatt (MW) plant.
SBPL started commercial
operations on Sept. 26, and currently generates power for Luzon, which accounts
for about 72% of the country’s gross domestic product.
“There’s a modest
impact in the fourth quarter,” Mr. Pangilinan said. There are profits for the
fourth quarter alone because you started COD (commercial operation date) end of
September so production is ramping up. It’s profitable in the fourth quarter,
but still small.”
The plant’s cost was
partly funded by a P42.15-billion project finance facility, which is said to be
the Philippines’ largest all-peso transaction to date. A consortium of local
banks put together the facility.
The power plant was
built by the consortium of South Korea’s Daelim Industrial Co. Ltd. and Japan’s
Mitsubishi Corp., which MGen described as “experienced engineering, procurement
and construction contractors with very strong track records.”
The SBPL plant is a
partnership between MGen, with a 51% stake, and New Growth BV, a wholly owned
subsidiary of the Electricity Generating Company of Thailand, the first
independent power producer in Thailand. It has the state-owned Electricity
Generating Authority of Thailand as a controlling shareholder.
“We may get a bit of
reimbursement from the contractor. On the whole our share might be around more
or less P500-600 million so it will reduce the loss of MGen, small loss na
lang for the year,” Mr. Pangilinan said. “Next year ang full impact talaga.”
Meralco’s controlling
stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT,
Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary
MediaQuest Holdings, Inc., has interest in BusinessWorld through the
Philippine Star Group, which it controls. — Victor V. Saulon
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