New plants projected to hike First Gen net profit by $30M

by Myrna Velasco – May 12, 2016

from Manila Bulletin

The new power plants of First Gen Corporation that are already advancing to commercial operation phases will expectedly boost its net income by $20 million to $30 million within the year.

First Gen chief financial officer Emmanuel P. Singson said “we’re looking at $20-$30 million for both Avion and San Gabriel (power plants) of net income.”

The greenfield power plants of the Lopez group – namely the 97-megawatt Avion aero-derivative and 414MW San Gabriel gas-fired plants – are both expected reaching full commercial operations this year.

According to First Gen president and chief operating officer Francis Giles B Puno, the two plants’ generated capacity are currently offered in the market on a “merchant” basis.

“What we’re doing is we dispatch the plant through commissioning – we’re dispatching it during the day, not at night because there’s no value… when commissioning, we just have to accept what’s the price at the WESM (Wholesale Electricity Spot Market),” he said.

He further noted that there are also periods “when San Gabriel will have to run 24 hours,” noting that “the advantage of San Gabriel is its operations is very flexible – but it’s meant to ramp up in the morning and shutdown completely at night.”

Puno said the San Gabriel plant is a bit delayed based on original timeline, “but we hope to reach full commercial operations by August.”

The plant is already running, but it is still at limited capacity – generally based on the demand of the market at particular periods.

He stressed though that once the plants reach full commercial operations, they are hoping that they can finally firm up power supply agreements with targeted off-takers (capacity buyers) – including that of the Manila Electric Company.

“Right now it’s purely merchant, but we’ve offered to the likes of Meralco, other DUs (distribution utilities) as well as industrial, it’s on-going. It will be covered by CSP (competitive selection process),” Puno said.

He asserted “fortunately for us, when you look at the heat and power demand… power demand from last year was already 11-percent up. The timing for Avion and San Gabriel is actually quite good.”

The First Gen executive added “we’ve offered part of the output to the market…when you look at the market, growth for mid-merit market is bigger than baseload.”