EDC allocates P14-billion capex for 2016

by Lenie Lectura – March 14, 2016

from Business Mirror

LOPEZ-LED Energy Development Corp. (EDC) is earmarking P14 billion in capital expenditure (capex) this year, higher than the P10 billion to P12 billion earmarked last year.

EDC CFO Nestor Vasay said bulk of capex would be set aside to fund the upgrade of the company’s 112.5-megawatt (MW) Tongonan geothermal-power plant in Leyte that went on emergency shutdown last year due to issues related to the facility’s age.

“The capex is P14 billion this year. The rest will be allotted for some drilling and interconnection in Mindanao,” Vasay said.

EDC President Richard Tantoco said the impact of the outage on EDC’s operation cost the company “about P700 million in foregone revenues when these went offline for six months.”

“Right now, the focus really is in Tongonan. We want to put investments on that to boost the reliability,” he said, referring to the power plant, which consists of three units with 37.5 MW each.

Tantoco said “about P4.3 billion” would be allotted to retrofit the three units. “We already ordered all equipment from Mitsubishi, arriving in the fourth quarter this year. All units will start shutting down, one after the other, for a total of 145 days.”

Last week EDC said the company’s 2015 revenues fell short of target, primarily due to reliability issues of the Tongonan geothermal plant and the temporary curtailment of the Burgos wind project early in the year due to transmission constraints.

“We look forward to start the full rehab and retrofit of the Tongonan units in October this year, with the new turbine rotors from Mitsubishi improving efficiency and increasing output,” Tantoco said.

EDC also operates the Unified Leyte geothermal-power facility in the same province. It consists of the 125-MW Upper Mahiao plant, the 232.5-MW Matlibog plant, the 180-MW Mahanagdong plant and the 51-MW Leyte optimization plants.

The plants also sustained heavy damage when Supertyphoon Yolanda (international code name Haiyan) hit the region in November 2013.

“And also, the Upper Mahiyao, we’ve ordered new motors from GE. They’ll arrive from Chicago in the third or fourth quarter of this year. So, we are also investing to boost the reliability of our assets,” Tantoco said.

The company is the largest geothermal producer in the country. It has also expanded to other sources like wind, solar and hydropower. It has a total installed geothermal capacity of 1,169 MW, or 60.9 percent of the country’s 1,918 MW installed geothermal capacity in 2014.

EDC has close to P18 billion in cash right now, Vasay said. “But we also have a major refinancing planned at the later part of this year,” amounting to “close to P5 billion.”

Vasay added that the refinancing would involve the participation of local banks.

EDC reported last week that the core profit in 2015 dropped by 4 percent to P8.8 billion from P9.2 billion the previous year due to higher operating expenditures. The company’s consolidated income, inclusive of nonrecurring items, stood at P7.6 billion, 35 percent lower than the P11.7 billion booked the previous year.

EDC recorded higher operating and depreciation expenses from assets reporting their first full year of operations last year. It also incurred increased power plant and pipeline maintenance expenditures for both the Leyte and Palinpinon projects.

Moreover, EDC invested in a fleet-wide typhoon-proofing project to make its facilities more resilient against severe-weather disturbances.