THE two new gas-fired power plant of First Gen Corp. are expected to contribute up to $30 million (about P1.38 billion at P46:$1) in the Lopez-led firm’s net earnings this year.
“They would contribute $20 million to $30 million to our bottom line this year,” said First Gen CFO Emmanuel Singson after the company’s stockholders’ meeting on Wednesday morning.
First Gen posted a net income of $167 million in 2015, 13 percent lower than the $193 million made in 2014. The decline was mainly attributed to First Gen’s subsidiary Energy Development Corp.’s lower earnings due to higher operating expenses.
The 97-megawatt (MW) Avion open-cycle natural gas-fired power plant of Prime Meridian Powergen Corp. is expected to start operating during the first half of the year and the 414-MW San Gabriel combined cycle natural-gas plant of First NatGas Power Corp. (FGPC) during the second half of 2016.
PMPC and FHPC are wholly owned subsidiaries of First Gen.
First Gen President Francis Giles Puno said both gas plants would operate as merchant plants that sell electricity in the Wholesale Electricity Spot Market (WESM).
“Avion is going to be a merchant plant, and it would operate when it is needed. It’s going to be based on WESM prices. San Gabriel is purely a merchant plant, but we may also offer part of the output to off-takers, such as Meralco and industrial users,” Puno said.
San Gabriel is now shifting toward commissioning. Puno said it would start commercial operation by August this year. Once in operation, it will be the most efficient and technologically advanced natural-gas plant in Southeast Asia with an efficiency of nearly 60 percent.
San Gabriel will initially run on natural gas produced from the Malampaya field off southwestern Palawan province, which is operated by a consortium led by Shell Philippines Exploration BV.
The other two gas plants of First Gen are the 1,000-MW Santa Rita, which is operated by FGPC, and the 500-MW San Lorenzo of FGP Corp. (FGP). FGPC and FGP are subsidiaries of First Gen. All gas plants are located in Batangas City.
Singson said capital expenditures (capex) of the company this year would amount to $200 million. The amount would be spent “to complete San Gabriel and Avion.”
“The capex is fully funded, so there will be no major financing requirement for the year,” he said.
The company is planning to put more plants in the future. These are the 414-MW Santa Maria and the 414-MW Saint Joseph plants. Company Chairman Federico Lopez said these plants will provide the necessary scale and anchor load for what could be the country’s first liquefied natural gas (LNG) import terminal by 2022.
“We are quite enthusiastic about this project as it will enable the Philippines to have scalable, lower-carbon alternatives to imported coal for its future power needs,” he said.
An LNG terminal is estimated to reach $1 billion. Puno said the LNG terminal’s planned construction and operation is in preparation for the exhaustion of the Malampaya gas field, projected between 2022 and 2024, and to secure the future of the company’s natural-gas platform.
The LNG terminal’s front-end engineering design is currently in the third revision stage and potential suppliers have been engaged. “A partner of the LNG project is not needed yet. The plan this year is to conduct site preparation, which would cost around $30 million, and to start tendering process for EPC [engineering, procurement, construction] by early next year,” Puno said.