Energy Development Corp. has earmarked P14 billion in capital expenditures this year from around P10 billion to P12 billion in 2015, company officials said over the weekend.
EDC president and chief operating officer Richard Tantoco told reporters the company would allot the bulk of the amount to improve the reliability of the 112.5-megawatt Tongonan geothermal power plant in Leyte.
“Because last year, it cost us about P700 million in foregone revenues when the plant was down for six months, so we want to put investments on that to boost the reliability,” Tantoco said.
He said the company would spend around P4.3 billion for the Tongonan project, which he estimated to take 145 days.
“We already have 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,” Tantoco said.
He said the company was investing to improve the reliability of other assets, as well such as the 125-MW Upper Mahiao geothermal plant in Leyte.
“For the Upper Mahiyao, we’ve ordered new motors from GE, they’ll arrive from Chicago in third or fourth quarter of this year. So we are also investing to boost the reliability of our assets,” Tantoco said.
He said the company, the country’s biggest geothermal producer, would also invest for geothermal drilling operations this year.
“The capex is P14 billion this year which includes drilling [costs],” EDC chief financial officer Nestor Vasay said.
Tantoco, meanwhile, said EDC’s bottom line in 2016 was dependent on the movement of prices at the Wholesale Electricity Spot Market, the country’s trading floor of electricity.
EDC earlier said consolidated recurring net income attributable to equity holders of the parent company declined four percent to P8.8 billion in 2015 from P9.2 billion in 2014 on higher operating expenditures.
Inclusive of non-recurring items, EDC’s consolidated net income attributable to equity holders of the parent, or core net income, also declined 35 percent to P7.6 billion from P11.7 billion in 2014.
“The outlook for the year is highly dependent on what’s going to go on with the WESM prices, because 85 percent of our output is contracted, so the 15 percent will depend on the outlook for oil,” Tantoco said.
He said the company closed its full year operations with P18 billion in cash but EDC had a major refinancing of close to P5 billion from local banks planned at the later part of the year.
EDC, an affiliate of First Gen Corp., owns 1,441 megawatts of generating capacity comprising of 1,159 MW of geothermal, 150 MW of wind, 132 MW of hydro and 4 MW of solar.