Huge debts slash TeaM Energy profit in 2007

TeaM Energy Corp., the Japanese consortium that bought out  Mirant Philippines Inc., posted a net income of $25 million in 2007, a substantial drop from the  $200 million earnings  in 2006.

Federico Puno, TeaM Energy president, said the huge decline  in earnings was brought about by the massive debt payments made by the company last year.

“Despite cost cutting and plant efficiency measures, the company’s debt load is now higher because of the loan the company incurred as a result of its acquisition of Mirant Corp.’s assets in the Philippines,” he said.

The acquisition  of Mirant Philippines made our debt load  higher. From $400 million to $500 million, now its $3 billion,” he added.

TeaM Energy, composed of Marubeni Corp. and Tokyo Electric Power Corp., derives  revenues from the 1,200 megawatt coal fired power plant in Sual, Pangasinan;  735-mw coal fired power plant in Pagbilao, Quezon and  its 200-percent stake in the 1,200 mw Ilijan natural gas facility in Batangas.

“That’s  the  way we have to expand, we have to sell excess capacity to get higher revenues,”  Puno said.

The company is planning to expand the capacity of the Pagbilao plant by an additional 350 mw.

TeaM Energy is also in talks with Mitsubishi Heavy Industries for the engineering, procurement and construction (EPC) of the Pagbilao expansion. The company targets to start construction by 2009.

It is also eyeing the expansion of the Sual and Ilijan facilities in the near future.

Puno said the company has set capital expenditures of between $4 million to $5 million this year for the maintenance of the power plants.

The company official said they are in talks with the Energy Regulatory Commission (ERC) for the initial public offering of independent power producers (IPPs) as mandated under the Electric Power  Industry  Reform Act of 2001.

Under  the EPIRA, generation companies and distribution utilities are required to offer a portion of their common stock to the public.

The  IPPs, mostly members of the Philippine Independent Power Producers Association (PIPPA), have earlier  asked the ERC to clarify the rules that will govern the requirement of public offering.

PIPPA said the ERC should consider that at present, generation companies have a poor public image due to the rising cost of electricity brought about by the increase in fuel prices and the expanded value added tax.

“Hence, a public offering at a time when the public looks unkindly towards the generation companies may have a negative effect on the offering,” PIPPA said.