SPC net income down 10.3% in January to September

by Lenie Lectura – November 19, 2015

from Business Mirror

LOWER earnings from its power-generation business and lower equity share in the earnings of associates dragged down SPC Power Corp.’s net income for the first nine months of the year by 10.3 percent to P1.14 billion, from P1.27 billion in the same period a year ago.

SPC reported that income contribution of the power-generation business dropped by 31.6 percent to P256.9 million from P375.3 million due mainly to the expiration of the operation and maintenance service contacts (OMSCs) for the 153.1-megawatt (MW) Naga power plant and the 650-MW Malaya thermal power plant that took effect on September 24 and October 25 last year, respectively.

Total equity share in the earnings of its associates also decreased by 2.7 percent to P843 .7 million on account of unrealized foreign-exchange losses from the revaluation of remaining dollar-denominated obligations.

Revenues also decreased to P2 billion from January to September this year. The company, however, said the revenue decline stood at only 2.2 percent as revenue lost from the termination of the OMSCs was partially offset by higher sales through ancillary services, bilateral contracts and the spot market, including higher pass-through fuel cost of energy sold.

The company’s expenses also increased by 2.2 percent to P136.6 million, mainly on account of higher expenses for taxes, business development and amortization.

Over a year after the Power Sector Assets and Liabilities Management Corp. (PSALM) turned over the Naga power facility, the Supreme Court (SC) nullified the award of the Naga Power Plant Complex to SPC. “To date, the company has not received a copy of the Supreme Court decision. However, on the assumption that the decision is what has been reported, the company intends to file a motion for reconsideration thereof,” SPC said. If the SC decision would not be reversed, SPC said this would derail its planned construction of a 300-MW coal plant in Cebu.

“Considering the investments that we already poured in after the award and turnover of the asset, if at all, a change in rules should only be prospective and not retroactive.  Business cannot develop properly if the rules change in the middle of the game,” said Alfredo Ballesteros, SPC senior vice president.  “The decision, if not reconsidered, will surely set back the construction and introduction of additional new 300-MW capacity in the Visayas grid which has already thin reserves.”

For the Malaya plant, PSALM awarded the new contract to another bidder who submitted a higher bid than SPC.