EDC sees flat growth in revenue this year

Energy Development Corp., the country’s largest producer of geothermal energy, expects growth of its revenue and recurring income to be flat this year.

According to Erwin O. Avante, vice president for corporate finance of EDC, the company expects a decline in sales from ancillary services, while the planned two-month shutdown of the Palinpinon geothermal facilities due to rehabilitation will have an impact on its bottom line.

In a briefing following the company’s stockholders’ meeting Tuesday, EDC officials explained that the rate of ancillary services being provided to the National Grid Corp. of the Philippines—operator of the country’s major transmission network—has gone down considerably.

At the same time, they said, the number of players offering the same services has increased, thus the venture is no longer as lucrative as before.

Electricity production at the 305-megawatt Palinpinon-Tongonan power plants will be reduced once the two units undergo rehabilitation for 66 days.

Avante estimated foregone revenue to be equivalent to around P900 million.

What will help prop up sales is the start of commercial operations of the 55-MW Bacon-Manito I geothermal plant in July this year. The plant will contribute P160 million in revenue a month, the company said.

In the first quarter this year, EDC posted a net income attributable to equity holders of P2.698 billion, down slightly from the P 2.699 billion a year ago.

The earnings performance resulted from an increase in the revenue contribution of Green Core Geothermal Inc. (GCGI), which had offset the drop in First Gen Hydro Power Corp.’s revenue contribution.

GCGI and First Gen Hydro are the companies behind the 305-MW Palinpinon-Tongcnan geothermal power plant and the 132 MW Pantabangan-Masiway hydropower plant, respectively.

“The income results for the quarter are generally in line with our expectation for revenues of  First Gen Hydro to decline with the increased competition for the ancillary services market and for revenues of GCGI to remain robust and start to pick up with its growing number of non-institutional customers,” said EDC president and COO Richard B. Tantoco.

Recurring net income to equity holders of EDC stood at P2.578 billion—up by 10 percent from P2.344 billion a year ago.

Also, Tantoco said the company is currently ramping up its exploration activities here and abroad as the Lopez affiliate targets to add up to 1,200 MW to its existing portfolio within the next decade.

Half of this projected capacity is expected to come from domestic expansion while the rest will come from its overseas ventures, particularly in Chile, Peru, Indonesia, and possibly Kenya, Tantoco added.