Alsons investing $180 M for Mindanao power plants

MANILA, Philippines – Expecting a slowdown in net earnings by yearend, Alsons Power Group is pouring in around $180 million in three years starting 2017 to complete two coal-fired power projects in Mindanao to augment supply in the region, company officials said.

The company sees a decline in net income this year from 2015 levels since its two diesel plants have been converted into merchant plants, Alsons executive vice president and COO Tirso Santillan said in a roundtable discussion with reporters.

“I don’t have numbers, but [2016] numbers will be lower than 2015,” he said. “This is because our diesel plants started operating as merchant plants this year.”

Its parent firm Alsons Consolidated Resources Inc. booked a net income of P691 million in 2015, of which 90 percent is contributed by the power business.

Previously, Alsons Power sourced its net earnings fully from its three diesel plants, the 103-megawatt (MW) Mapalad Power Corp. (MPC), the 100-MW Western Mindanao Power Corp. (WMPC) and the 55-MW Southern Philippines Power Corp. (SPPC).

Previously, WMPC and SPPC have energy conversion agreements (ECA) with National Power Corp. (Napocor)—which assure their generated power will be sold—but these lapsed earlier this year.

Mitigating the change in operations in its diesel plants is the 105-MW Section 1 of the Sarangani Energy Corp. coal plant, which started commercial operations in April 2016 and is fully contracted.

“We added Section 1 of SEC for 2016, which was a capacity non-existent in 2015,” Santillan said, noting this will add earnings from its six-month operation.

To further support its business, the company will start working on two coal-fired power plants, the 210-MW Section 2 of the SEC plant and the 105-MW San Ramon Power Inc. (SRPI), next year.

Santillan said both projects are estimated to cost around $600 million, of which approximately $180 million will be funded by equity until 2020. This will form part of the major capital expenditures (capex) of the company in the next three years.

Section 2 of SEC is targeted for completion in 2019 while SRPI will be finished by 2020.

Apart from the coal-fired power plants in the pipeline, Alsons Power will also start working on two renewable energy (RE) projects.

The first is the 15-MW Siguil run-of-river power project and a 20-MW solar farm both in Sarangani.

The company has yet to finalize the costs for both projects since it is in the process of getting contracts.

The two RE projects are planned to start construction towards the end of 2017, Alsons head of planning Antonio Miguel Alcantara said in the same briefing.