The country’s oldest conglomerate is reviewing its medium-term goals for two of its noncore businesses, as it ends this year its multibillion-peso six-year master plan for infrastructure and power.
For one, Ayala Corp. Managing Director John Eric T. Francia said his company’s infrastructure arm will be “very selective” in choosing which projects it will place a bid on, focusing on deals whose scale and scope
are “right-sized.”
“An example would be the Philippine National Railways, or the PNR South Extension, something we’d like to participate in and something that is strategic to the company,” Francia, who is also the president of AC Infrastructure Holdings Corp., said in a meeting on Monday.
Francia was referring to the second phase of the P287-billion North-South Railway System, which will run from Bulacan to Sorsogon, providing connectivity and ease of travel.
The second phase of the facility will involve the construction of a 653-kilometer narrow-gauge railway from Tutuban in Manila to Matnog in Sorsogon. Construction is expected to start in the first quarter of 2016 and will be opened in the fourth quarter of 2019.
“We have to go for projects that are right-sized, because some are too large, which makes it difficult for the private sector to fund and manage,” he said.
The investment for the PNR-South Extension would be somewhere in the “multibillion-dollar magnitude.”
“There is a possibility that the project will be probably scaled and scoped properly, making it palatable to the private sector. We want to make sure that we are ready if and when that project has materialized,” Francia said.
He added that the company is now in talks with potential partners for the auction of the railway-development deal.
“We are in the early stages of discussion with other partners,” he said.
On the energy front, Francia said his company is close to achieving its goal of putting up 1,000 megawatts (MW) of power-generation capacity by 2016.
Francia, who is also the president of AC Energy Holdings Inc., said the current equity for the attributable capacity of his company is “over 700 MW.” The total capacity of its six power projects amounts to about 1,000 MW.
“We can—based on the pipeline —put up another project that could take the 700 MW to the 1,000-MW territory by a seventh platform or company,” he said.
These are, then, expandable by 500 MW to 1,500 MW, “but that’s more for 2016 and beyond.”
“If we add more platforms, then we could expand,” Francia said, adding that his company is looking for new locations for its power-generating arm.
“But it will depend on the plan of the national government,” he quickly explained.
The company recently secured financing for the construction of a 4×135-MW coal-fired power plant in Kauswagan, Lanao del Norte in Mindanao. The Mindanao power plant is developed by GN Power Kauswagan Ltd. Co., a limited partnership among AC Energy, the Philippine Investment Alliance for Infrastructure (Pinai) Fund and Power Partners Ltd. Co. Construction of the plant is expected to commence in early 2015, and will be operational by 2017.
AC Energy is also involved in the development of a 2×600-MW power plant in Bataan beside the existing GN Power Mariveles plant, which is 17-percent owned by AC Energy. The new power plant has yet to achieve financial close, which is targeted in 2015.
In the meantime, the first unit of its 2×135 -MW coal-fired power plant in Calaca, Batangas under South Luzon Thermal Energy Corp. (SLTEC), a joint venture with Trans-Asia Oil and Development Corp., is scheduled to start commercial operations by the first quarter of the year. The second 135-MW unit of the plant is currently under construction and is expected to be completed by the end of the year.
One of the power projects that is already online is the 19-MW expansion of Northwind Power Development Corp. (Northwind) in Bangui, Ilocos Norte. The expansion has brought total capacity of Northwind’s facility to 52MW. The Department of Energy (DOE) has issued a Certificate of Endorsement for feed-in tariff (FIT) for this expansion.
AC Energy, through its affiliate North Luzon Renewable Energy Corp. (NLREC), also completed its 81-MW wind farm in Pagudpud, Ilocos Norte, in November last year. It has, likewise, been operational and has received the Certificate of Endorsement for FIT from the DOE. Combined, Northwind and NLREC put Ayala’s total wind-power capacity at 133 MW.
Ayala Corp. has committed to spend $1 billion in equity to the power and infrastructure sectors. Bulk, or 70 percent, of the multibillion-peso investment went to power while the remaining 30 percent went to infrastructure.
“We are looking into projects that will be committed from 2016 to 2020. We are still working with our plans, though,” Francia said.
In terms of investments in the government’s key infrastructure program, the conglomerate has spent P9 billion for three deals: the P2.2-billion Daang Hari-South Luzon Expressway Connector Road or the Muntinlupa-Cavite Expressway (MCX), the P1.72-billion Automated Fare Collection System and the P64.9-billion Light Rail Transit Line 1 Cavite Extension.
The last two contracts mentioned are for implementation with Ayala Corp.’s partner, Metro Pacific Investments Corp.
The construction of the MCX, meanwhile, is expected to be completed by June 2015, three months behind its March 2015 completion schedule.
Francia explained that the delay in completion is “attributed to on-site challenges, which resulted in the redesign of certain portions of the access tunnels leading to the South Luzon Expressway.”
“The unavailability of as-built plans for an existing bridge also contributed to the delay as excavation work for the tunnel had to proceed at a much slower pace,” he explained. “This is to avoid possible damage to the existing structure and ensure public safety as the bridge is heavily used by the public.”
While the construction completion is targeted for June, commercial operations will only start once the Department of Public Works and Highways and the Toll Regulatory Board issue the substantial completion and the toll operation certificates.
“It usually takes some time. These are regulatory processes and we’re trying to expedite it by working with the government agencies,” AC Infrastructure Executive Vice President Noel Eli B. Kintanar said during the same briefing.
He added: “We are optimistic that a June construction completion is achievable barring further delays in the right of way delivery and any unforeseen on-site technical issues. Once in operation, the MCX is expected to significantly help decongest traffic in Daang Hari and Alabang areas, as well as improve access to Cavite, Muntinlupa and Las Piñas from Metro Manila’s central business district and the rest of Southern Luzon.”