Ayala readies $2.5B worth of power projects

Conglomerate Ayala Corp. is embarking on $2.5 billion worth of power projects to build a portfolio of about 1,000 megawatts over the next five years as it eyes to make energy one of its core businesses over the long term.

Eric T. Francia, managing director and group head for corporate strategy and development of Ayala, explained that of this amount, the company expected equity investment to reach $500 million.

Ayala, according to Francia, was looking at a “balanced portfolio” of power generation coming from greenfield projects fueled by traditional fossil fuels like coal and renewable energy. Also being considered are possible asset acquisitions.

The goal is to at least start the construction of the proposed power plants over the next five years as it would be impossible to have all the 1,000 MW coming on stream within that period.

Francia added that Ayala has been entering into partnerships with companies that have the expertise in the energy industry. In 2010, Ayala formed a joint venture with Mitsubishi Corp. of Japan to develop solar power projects in the Philippines. Last year, Ayala’s power generation arm, Michigan Power Inc., acquired a 50-percent stake in NorthWind Power Development Corp., which owns and operates Southeast Asia’s first commercial wind facility, the 33-MW wind farm in Bangui, Ilocos Norte.

Through a vehicle company called South Luzon Thermal Energy Corp., Ayala-led AC Energy Holdings and Trans-Asia Oil are constructing a P12-billion, 135-MW coal-fired facility in Batangas. The second phase will see the construction of another 135-MW coal-fed unit within the same compound.

For its mini-hydropower ventures, Ayala has partnered with Sta. Clara Power Corp., which holds several service contracts for hydropower projects. The partnership will involve at least 100 MW worth of capacity.

“Our aspiration is to make [power] one of our major legs within the five- to 10-year horizon, contributing to equity earnings as one of our core businesses. As you know, our core businesses—the big four—contribute more than P1 billion in equity earnings to Ayala. So our aspiration is that over a five- to 10-year period, hopefully, our equity earnings from these projects will be in that order of magnitude,” Francia said.