ATTRIBUTING the lower-than-previous net income to its debt load, TeaM Energy Corp., the new owner of Mirant Philippines’ assets, said it posted a net income of $25 million last year, down from $200 million during the previous year.

“Our net income has significantly decreased last year compared with the previous years because of a higher debt load of $2.7 billion from around $400 million to $500 million in the previous years,” Federico E. Puno, TeaM Energy president and chief executive, told reporters in a press conference.

TeaM Energy is the joint venture between Tokyo Electric Power Co. (Tepco) and Marubeni Corp. that bought US-based Mirant Corp.’s assets in the Philippines.

He explained that his company’s debt load increased due to the acquisition of Mirant’s assets in the Philippines, which it acquired for $3.4 billion.

In 2006 Puno said the previous owners of Mirant had a net income of close to P10 billion. He added that at that time their leverage was only $400 million to $500 million as against to $2.7 billion now.

Puno said TeaM Energy has programmed a capital-expenditure budget of $5 million to finance its plant operations and maintenance this year.

“Considering the lower-than-previous net income, there is a need for them to expand their capacity to increase their revenues. Right now, the capacity we have only gives us revenues of 52 megawatts [MW], when we have a potential of 253 MW, so we still have 200 MW of unused capacity,” said Puno, adding that if the company just stays at the present, its net income will remain between $25  million and $30 million a year.

Puno earlier said the company is set to expand the current capacity of its 735-MW Pagbilao coal-fired power plant by another 350 MW to bring in additional power for the Luzon grid during critical periods.

He said the company is currently trying to get 250 MW in power-purchase agreements from potential off-takers from private utilities, rural electric cooperatives and some industrial accounts.

Puno said his company is also currently reviewing its engineering, procurement and construction contracts and updating the existing feasibility studies made by Mirant Philippines Corp.—the former owner of its assets.

Puno said the company already has 52 MW on contract and that it is working on the rest that will basically come from a mix of private utility, rural electric cooperatives and some industrial accounts. “Our target is to get the 250-MW critical mass of power-purchase agreements done by this year. And we have an advantage over other people trying to get contracts, since we can serve them with our excess capacity of 218 MW from the 1,000-MW Sual coal-fired power plant in Sual and 35 MW from the Pagbilao coal-fired power plant.”

As a rule of thumb, a coal-fired power plant could entail investments ranging from $1.5 million to $2 million.

But Puno said the cost to put up the expansion could even be lower, considering that the site already has common facilities, such as unloading facilities, a pier and a water-treatment facility.

 Puno said the existing common facilities are sufficient to support another unit. “However, the next thing we have to do is to negotiate with Psalm [Power Sector Assets and Liabilities Management Corp.] to be able to use the common facilities, since the third unit will own the expansion unit—which will no longer be turned over to the government.

Puno said they are looking at starting construction by next year.

Upon completion of the technical components of the project, Puno said the company will also have to line up for financing.

TeaM Energy is actually looking at tapping the Japan Bank for International Cooperation to finance the expansion of the Pagbilao.

“At the same time, we also want to see how strong the peso gets to also determine if it will be better for us to borrow in peso. But definitely for the Pagbilao, it will have to be peso financing as most of the revenues will be peso-denominated, since we will be selling to local industries,” explained Puno.  

TeaM Energy was established by CrimsonPower Holdings Co. Inc. to continue doing its part in providing a stable electricity supply to the country through long-term electricity purchase and fuel-supply contracts with the National Power Corp. and, to provide approximately 20 percent of the generating capacity in the Luzon region, including Manila.

CrimsonPower Holdings Co. Inc. is the consortium formed by Tokyo Electric Power Co. Inc. and Marubeni Corp. to acquire Mirant Asia-Pacific Ltd.’s shares for $3.4 billion.

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ATTRIBUTING the lower-than-previous net income to its debt load, TeaM Energy Corp., the new owner of Mirant Philippines’ assets, said it posted a net income of $25 million last year, down from $200 million during the previous year.