Ayala plots increase in power investments

MANILA, Philippines—Conglomerate Ayala Corp. wants to complete a 405-megawatt (MW) coal power plant in Lanao del Norte by 2018 as it continues to aggressively invest in power generation, a company official said last week.

Ayala managing director John Eric Francia told reporters that the power facility, which could be expanded to 540 MW, was expected to start construction by the second half of 2014 after the conglomerate completes financial closing and obtains the necessary permits.

Francia declined to provide financial figures but industry estimates pegged the project cost at $1.5 million to $2 million per MW, suggesting a total minimum investment of about $600 million.

“We will most likely underwrite the whole equity check,” said Francia, while adding that the conglomerate was open to eventually taking on equity partners.

He clarified that Ayala, which had tapped GNPower Ltd. and Quezon Power as “developer” partners, was not in talks with other groups for an investment in the coal power project, located in Kauswagan municipality in Lanao de Norte.

Because it was initially underwriting the entire equity portion, the project is likely the conglomerate’s single-biggest investment in power generation, which is a relatively new business for Ayala in a sector dominated by larger players like San Miguel Corp., Aboitiz Power and the Lopez clan’s First Gen.

Francia added that the group was on track in terms of assembling a 1,000-MW portfolio of power projects that would either be in operation or under construction by 2016.

He said the company had 350 MW today and Ayala would be spending another $400 million in equity over the next two years to hit its goal.

Francia added that the group would likely tap the debt and equity markets to finance its projects.

Ayala owns about a fifth of GNPower Mariveles Coal Plant Ltd. Co., which owns a 600-MW coal-fired power plant in Mariveles, Bataan.

It also has a 50 percent stake in South Luzon Thermal Energy Corp. for a 270-MW coal power plant rising in Batangas province, Ayala briefing materials covering the end of 2013 showed.

It also has stakes in wind power companies with a combined capacity of 114 MW and a mini-hydro pilot project with 11 MW, the same briefing materials showed.

Ayala, whose main business is in real estate development, telecommunications, banking and water supply, is investing a total of P190 billion in 2014 for expansion purposes against the P120 billion it spent the previous year.