EDC to recover P1.8-B revenue loss

MANILA, Philippines - Energy Development Corp. (EDC), the renewable energy development arm of the Lopez Group, expects to recover a revenue loss of P1.8 billion after completing the rehabilitation of the Bacon-Manito geothermal power facilities, a top company official said.

EDC president and COO Ricard Tantoco said the losses from BacMan would also make their income growth “modest” for the year.

“(Our) second quarter sales, until we get BacMan back on line, our numbers will be fairly modest because with the BacMan arrangement, effectively we’ve lost P1.8 billion a year on take-or-pay revenue. So we acquired BacMan but while we’re rehabilitating it, the revenue goes to zero, that used to be take-or-pay. I don’t expect any significant growth this year,” he said.

He explained that the company has been bearing the brunt of the non-operation of the geothermal facilities.

“The loss in BacMan per year, for every 12 months that we’re under rehab, we forego completely P1.8 billion in revenues,” he said.

He said they expect the rehabilitation of some of the units of BacMan to be completed next month.

“We’re expecting the first units to be back sometime end of July, first week of August. Originally, it was 24 months, we were able to cut it down to 10 to 11 months, we’ll have it (four units) back online,” he said.

He said the total capacity of the units that would be back online by the third quarter would be about 130 megawatts.

The company, he said, expects the remaining rehabilitation efforts to be completed by the last quarter of this year.

EDC’s net income dropped to P1.45 billion in the first quarter of 2011 from P3.77 billion in the same period in 2010. The company’s core net income 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 foregone 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.

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-MW Pantabangan-Masiway hydro electric plants and has investments in wind energy projects in Ilocos Norte and other provinces.