SP New Energy selects contractor to build Terra Solar project

SP New Energy [SPNEC 1.04, down 0.9%; 104% avgVol] [link] announced that its subsidiary, Terra Solar Philippines (TSP), has signed an EPC contract (“Engineering, Procurement, and Construction”) with China Energy Engineering Group (Energy China). Under the terms of the EPC contract, Energy China will provide “turnkey delivery of key components for the Terra Solar project”, with Energy China “[overseeing] all aspects, including procurement, design, engineering, permitting, manufacturing, testing, logistics, and on-site delivery”. SPNEC added that Energy China will “provide warranty coverage” and will “develop specialized training programs for local teams and collaborate closely with stakeholders to facilitate the smooth integration of the project into the national grid.” SPNEC is a subsidiary of Meralco [MER 479.00, up 0.2%; 147% avgVol].

MB bottom-line: It was always the plan for SPNEC to hire out the development of the project, even back when Leandro Leviste still had control. Back then, Mr. Leviste was trying to frame SPNEC as basically a middleman that pairs solar land assets with Department of Energy power supply contracts and then goes fishing for a buyer to help materialize the plan. That’s the one thing about SPNEC that has never really changed. This signing is a big step as it puts other parties in motion to do the wet work, which is important if the group intends to keep its project delivery timelines intact. A welcome development for SPNEC bagholders who have been riding that share price roller coaster this year. SPNEC’s been down in the mid-P0.90s (twice), and up in the mid-P1.30s (twice) so far this year. SPNEC is just 4% above its IPO price of P1.00/share.

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.