MANILA, Philippines - Energy Development Corp. (EDC), the geothermal energy development arm of the Lopez Group, reported a 61.4-percent drop in its net income to P1.45 billion in the first quarter this year from P3.77 billion in the same period in 2010.
In a disclosure to the Philippine Stock Exchange, EDC president and COO Richard Tantoco said the company’s core net income — which excludes one-off or exceptional changes — also declined 61 percent to P1.23 billion from P3.16 billion.
“The income result for the quarter is generally in line with our expectation for revenues to decline in the interim mainly due to forgone steam sales for our Bacman project following the acquisition of the power plants in September 2010 and increased costs related to our acquisitions. As explained before, we are a company in transition, in investment mode for the future,” Tantoco said.
He also attributed the drop in earnings to lower numbers of subsidiary FG Hydro mainly to lower wholesale spot market price and output due to reservoir level.
The company also incurred higher operating expenses primarily due to increased operations and maintenance expenditures for the rehabilitation of the Bacman steamfield facilities, as well as taxes paid for newly acquired assets.
“It is necessary to accelerate this to re-commission the Bacman power plants within the year,” Tantoco said.
EDC, through subsidiaries Green Core Geothermal Inc. (GCGI) and Bacman Geothermal Inc. (BGI), acquired the state-owned geothermal power plants which source steam from the company’s steamfield assets.
With the acquisition, EDC’s steamfield and power plant operations became fully integrated, making its operations more efficient and cost-competitive.
Tantoco noted that EDC invested in the rehabilitation of the Tongonan, Palinpinon and Bacman power plants to bring them back to their rated capacities.
“As it is, the Tongonan and Palinpinon power plants have already realized significant improvements in terms of availability and reliability,” he said.
At the close of 2010, GCGI successfully sealed long-term power supply contracts with electric cooperatives in Leyte and Negros islands.
EDC remains the largest producer of geothermal energy in the Philippines, accounting for 62 percent of the total country installed geothermal capacity and is the largest integrated geothermal power company in the world.
Aside from geothermal, EDC also owns and operates the 132-megawatt Pantabangan-Masiway hydro electric plants and has investments in wind energy projects in Ilocos Norte and other provinces.