It is full steam ahead for the power generation projects of Manila Electric Co. in the next five years, despite a 43-percent drop in operating income, as the pandemic lockdown gnawed on its commercial and industrial businesses.
The power segment of holding company Metro Pacific Investment Corp. contributed P5.22 billion in operating income, down 14 percent from last year. Meralco and fellow energy subsidiary, Global Business Power Corp., saw 43-percent and 9-percent lower incomes to P106 billion and P1.1 billion, respectively, as the government implemented strict stay-at-home protocols to arrest the Covid-19 virus outbreak.
“We have not changed our plans nor our outlook as far as investing in power generation is concerned,” said Meralco president Ray Espinosa during the recent virtual media briefing by MPIC to announce the group’s first-half earnings for 2020.
MPIC reported a 63-percent earnings cut from January to June this year to P3.03 billion from P8.12 billion a year ago as measures to contain the outbreak hit the demand and operations of all its business segments.
Espinosa cautioned, however, while it is “full-steam ahead” for a healthy pipeline of renewable energy projects such as solar, wind, and hydro, “these projects will still have to be crystalized.”
“We will need to put these projects to test, run the numbers through the business model, etc.,” he said. “It’s still too early to make a detailed disclosure on the immediate investments to be made by Meralco, but we do have several in the horizon.”
The Meralco official acknowledged that additional, sustainable power supply will be crucial to support the country’s economic recovery the coming years.
“Building Meralco’s power distribution portfolio remains a highly strategic initiative of the company, especially now that the government needs support in terms of reliable, and efficient power supply to fuel the Philippines’ stalled growth momentum,” he said.
MPIC chief financial officer David Nicol agreed with Espinosa, noting that while the group is “keeping its powder dry” in terms of conserving cash, and deferring new investments as it seeks clarity in the second half of the year, “it’s discretionary on how much capex each company will lay out on new projects.”
“If you look at a company like Meralco, it’s already well-funded and so it can pursue its own agenda without needing capital from MPIC,” Nicol said.
Super critical plant
Meralco is looking at generating some 3,000 megawatts in the next five to seven years, including 1,000 MW from renewable energy to contribute to the country’s ever growing demand for stable, cost-competitive electricity.
“We will develop more renewable projects and at the same time be conscious of our need to generate lowest cost electricity to reach the farthest communities in the country,” said Rogelio Singson, president and CEO of Meralco PowerGen Corp., a wholly-owned power generation subsidiary of Meralco.
In September 2019, MGen and partner EGCO Group kicked off the commercial operations of San Buenaventura Power Ltd. Co.’s 455-MW high efficiency, low emission coal-fired power plant.
The supercritical power station is the first of its kind in the Philippines, and the most advanced operating coal plant in the country to date.
Earlier that year, the company incorporated MGen Renewable Energy Inc. which serves as the platform for the company’s strategic push for the development of utility-scale solar, wind and hydro projects.
MGreen’s first solar investment is a 50-MWac solar farm in Bulacan, which is currently ongoing construction and is expected to be completed later this year.