EDC eyes 11-fold hike in profit

MANILA, Philippines - Lopez-led Energy Development Corp. (EDC) is looking at growing its earnings by more than 11 times to P7 billion this year as it completes the rehabilitation of a geothermal power plant in Bicol.

It said its profits are expected to continue rising as it earmarks P20 billion for local and overseas exploration projects this year.

EDC president an COO Richard Tantoco said the Bacon-Manito (BacMan) geothermal plant will come onstream in the latter part of this year.

Last year, EDC’s profits slumped 86 percent to P615 million given lower steam sales. Its 150-megawatt (MW) BacMan geothermal power plant, however, will start commercial operations in the fourth quarter this year.

Furthermore, Tantoco said subsidiary Green Core Geothermal Inc. signed P900 million to P1 billion worth of new power supply contracts last December.

Tantoco said P6 billion out of the year’s budget will be allotted for its Burgos wind power project in Ilocos Norte.

“If the feed-in tariff is postponed and delayed and Burgos is moved to next year, that will not be spent,” Tantoco said.

But EDC chief finance officer Nestor Yasay said groups have withdrawn their opposition to the feed-in tariff system, particularly calls to bid out which companies will get perks under the approved 760-MW installation target.

“We are ready. We have prepared the cash for it,” Tantoco said.

The feed-in tariff scheme, whose implementation is already delayed by almost three years, guarantees investments of renewable energy firms through fixed rates that would be shouldered by consumers over a set period of time.

Furthermore, the remaining P14-billion capital will include the P1.4-billion funding for BacMan, P500 million for Green Core, P2 billion for brand new rigs, P2.2. billion for the replacement of wells and an unspecified amount to transfer the equipment of the 49-MW Northern Negros geothermal plant to the Nasulo project in Negros Oriental, Tantoco said.

With the transfer, Green Core will have an additional 25 MW to sell, translating to P1 billion in new revenues per year, Tantoco said.

Tantoco said the company needs no additional funding as it earns cash from existing operations while EDC has P10 billion in cash.

For the international operations, EDC wants to start commercial operations abroad by 2019.

“We are going to move in and push hard in the exploration in Peru,” Tantoco said.

Last week, EDC finalized its takeover of a majority stake in the Longavi geothermal concession in Chile, as well as the Chocopata and Quellaapacheta geothermal authorizations in Peru.

EDC is the world’s largest integrated producer of geothermal power. It is into the exploration, development and optimization of geothermal fields, as well as the operation and maintenance of the geothermal power plants with an aggregate capacity of 1,130 MW.