First Gen income down 13% in 6 months

Fuel availability issues dragged down earnings of First Gen Corp. in the first half despite achieving higher revenues.

The listed energy company of the Lopez Group reported a recurring net income of P6.6 billion in the first semester, down 13 percent from P7.1 billion in the same period last year.

First Gen said both of the company’s largest contributors, the natural gas and geothermal portfolios, suffered from reduced operating income.

“First Gen’s first half earnings were affected by fuel availability issues that specifically affected our natural gas, geothermal, and wind plants. We are at the mercy of nature to give us good wind conditions as was the case last year, but it unfortunately was the opposite this year,” First Gen president and COO Francis Giles Puno said.

Puno said the company’s geothermal system was affected by Typhoon Odette early this year and is currently catching up on maintenance activities, while its natural gas fleet was weighed down by gas interruptions at the Malampaya field that required importation of more costly liquid fuel.

“However, we experienced considerably less gas constraints by June and this has improved dispatch. Moreover, the expected commercial operations of our LNG terminal by next year should ease that further,” he said.

Attributable net income to parent of First Gen’s natural gas platform decreased to P4.8 billion from P5.2 billion.

First Gen said high fuel prices affected Avion power plant’s margins when it operated in merchant mode, while the San Gabriel power plant recognized lower capacity fees due to an insufficient availability of gas supply from Malampaya, as well as outage days to address equipment reliability issues.

Energy Development Corp. (EDC)’s attributable earnings, on the other hand, fell by 19 percent to P1.9 billion in the first half from P2.2 billion a year ago.

First Gen said EDC’s earnings were affected by outages at Bacman and Leyte due to maintenance activities, generation curtailment attributable to Typhoon Odette that created transmission constraints and reduced electricity demand, and the expiry of power contracts in Mindanao that needed to be re-contracted despite an oversupply situation.

The geothermal, wind, and solar platform under EDC suffered from lower wind generation at the Burgos project in the first half compounded by increased taxes as the income tax holiday of the Burgos project expired in November last year.

Meanwhile, the hydro platform’s contribution to First Gen’s recurring and non-recurring earnings saw a slight increase to P400 million from P300 million last year.

In terms of revenues from the sale of electricity, First Gen saw a 21 percent growth to P65.7 billion from P50.8 billion, driven by elevated fuel and Wholesale Electricity Spot Market (WESM) prices.