THEIR diversification in the power industry is another indication of the big business groups’ optimism about the Philippine economy’s future. Power generation is both a capital-intensive and long-term investment; it does not yield profits overnight.
This is good for the Philippines, where power shortages can derail economic growth. The US Energy Information Administration, in a report published online in March, said the Philippines “is facing growing concerns over resource adequacy in its power sector, as the nation is challenged to add supply quickly enough to keep up with growing demand.”
The report noted that in Mindanao, power shortages had already led to recurring outages.
The big demand for electricity has opened opportunities for investments by the big players in business. GT Capital, the flagship firm of George S.K. Ty, conducts its power-generation business through its 51.3-percent direct ownership interest in Global Business Power Corp. (GBP), a leading independent power producer in the Visayas with a combined gross dependable capacity of 704 megawatts (MW).
GBP continues to look for opportunities to expand its power portfolio not only in the Visayas but also in other parts of the country.
Trans-Asia Oil and Energy Development Corp., a unit of real-estate firm Phinma Group, is reportedly eyeing to double its generating capacity to about 500 MW by 2016, from 250 MW in 2014.
AC Energy Holdings Inc. of Ayala Corp., which initially ventured into renewable-energy projects, is now building a 540-MW coal-fired plant in Southern Mindanao as part of its efforts to have 1,000 MW in its power portfolio.
AC Energy currently has a total of 133-MW capacity in its wind-farm projects in Ilocos Norte.
Diversified San Miguel Corp. ventured into the power business by bidding for contracts to operate the power plants being privatized by the National Power Corp. This allowed the company, through SMC Global Power Holdings, to build a vertically integrated power company involving fuel sourcing, power generation and power distribution.
SMC Global’s portfolio includes the 1,000-MW coal-fired Sual Power Plant in Pangasinan, the 345-MW hydro-based San Roque Power Plant, also in Pangasinan, and the 1,200-MW gas-fired Ilijan Power Plant in Batangas.
SMC has also launched greenfield power plants in Alita, Davao, and in Limay, Bataan, with initial combined capacity of up to 900 MW.
Manila Electric Co. (Meralco), the country’s largest power distributor, is also ramping up its investments in power generation.
In a media briefing in July, the company disclosed its plans to invest $1.2 billion in equity in ongoing power-generation projects. The equity investments will go to the 460-MW plant in Mauban, Quezon, and the 600-MW plant in Subic, Zambales, which are being pursued in partnership with other investors.
Meralco is also developing a 1,200- MW power plant in Atimonan, also in Quezon, which will be 100-percent company-owned.
Meralco’s goal is to have a total generation capacity of 3,000 MW.
Publicly listed Vivant Corp. of Cebu’s Garcia-Escano family, which already has 249 MW in its portfolio, is planning to invest P67 billion for new power-genera-tion projects with total capacity exceeding 460 MW in the next three years.
Minergy Power Corp., which is owned 40 percent by Vivant, is currently building a coal-fired plant with three generating units of 55 MW each in Misamis Oriental. The project is expected to be completed in 2017.
Citicore Holdings Investment Inc., the parent company of listed Megawide Construction Corp., is also going into power generation with the establishment of Citicore Power. The company plans to develop up to 500 MW of renewable energy (solar, hydro and biomass) as part of its diversification activities.
The power industry is also attracting foreign investors. A Reuters report in June cited Thailand’s Chow Steel Industries as saying one of its units would invest $43 million in solar-power plants in the Philippines. Construction of the power plants is expected to be completed in 2016, the report said.
The growing interest in the power industry is timely because of the exciting things that are happening in the business sector. The aggressive moves by the big business players to expand and diversify will translate into increased demand for power.
Again, this can only be good for the Philippines.
(To be continued)
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