Ayala expects power generation business to shore up profitability
It is a gradual climb when it comes to “significant contribution” to its bottom line, but the energy arm of Ayala Corporation expects its power generation business to already start contributing favorably this year.
“Around two-thirds of our portfolio just started operations. It takes a couple of years before your assets stabilize. But this year, we expect it to be contributing already,” AC Energy Holdings president and chief executive officer Eric Francia has told reporters.
The biggest addition in their operating portfolio this year would be the second phase of their South Luzon Thermal Energy Corporation’s (SLTEC) coal plant in Batangas.
The 135-megawatt power facility is now on commissioning process. This is an expansion of the initial phase that was also at 135MW installed capacity. This is the conglomerate’s joint venture with the Del Rosario-led TransAsia Oil and Energy Development Corporation.
“The second unit of SLTEC is already being commissioned, so any time now, we should be in commercial operations,” Francia said. At this stage, their power business contribution to bottom line is still at single digit level.
But the real significant profit impact that AC Energy Holdings would come around 2019 with the targeted commercial operation of new power projects in Mindanao as well as the expansion of its coal plant in Mariveles, Bataan – both are tie-up ventures with GNPower.
This will then complete the 1,000MW portfolio that the company has set on blueprint. After that, Francia indicated that they would already take a more cautious approach on investment expansions given forecasts also of probable oversupply beyond 2019.
“Once GN Mindanao stabilizes, call it 2018-2019… hopefully sooner, given that we hope to start in 2017, then we’ll be able to see stable earnings by 2019,” the Ayala group’s energy executive has noted.
Francia is referring to the 600MW coal-fired power plant development of GNPower Kauswagan in Lanao del Norte that already advanced to construction phase.
He said equity investments in their power generation projects already hovered at $700 million, albeit he qualified that “part of that, there had been capital returns on refinancing and partial sell-down, among others.”