Energy firms brace for decline in demand

Power generators and distri­butors, as well as oil firms, are bracing for the coronavirus disease’s toll on their finances, mainly due to an anticipated decrease in demand for their services and products.

In regulatory filings, many such companies said they had scaled down the movement of personnel as part of community quarantine measures but gave assurance that operations were unimpeded.

Manila Electric Co. said it was foreseeing potential impacts of COVID-19 such that efficient operation and maintenance services of equipment might be affected in case of delay of delivery of some essential materials and parts that were sourced from China.

With businesses shut down and people confined to their homes, the power distribution giant also sees reduced demand from the commercial and industrial sectors, which could be partially offset by a rise in demand from residential customers.Cebu-based Vivant Corp. said the decline in electricity consumption might affect its subsidiaries, including Visayan Electric Co., Therma Visayas Inc., Cebu Energy Development Corp., Calamian Islands Power Corp., Delta P Inc., Prism Energy Inc., CorEnergy Inc. and Sabang Renewable Energy Corp.Vivant also noted a possible decline in market prices, which might result to lower energy sales.

“When the wholesale electricity supply market prices are low, more generation companies move to the ancillary service market thereby causing ASPA (ancillary procurement agreement) bids to be lower,” Vivant explained.

Ancillary services refer to the provision of electricity for a power company’s—such as National Grid Corp. of the Philippines—own use as opposed to electricity that is delivered for end-consumers’ use.

First Gen Corp., whose subsidiaries operate most of the Philippines’ natural gas-fired power plants, said all its power plants could be operated with a few key personnel.

“[W]e do not expect COVID-19 to have any material impact on current plant operations,” FirstGen said.

PetroEnergy Resources Corp. said that due to travel restrictions, scheduled power plant maintenance by third-party foreign suppliers might also be affected. Greenergy Holdings Inc. said one of its suppliers, Hanergy Thin Film Power Asia Pacific Ltd., gave notice that a shipment of Hanergy solar products would be postponed until after the community quarantine period.

SPC Power Corp. said COVID-19 “will certainly drive reduction in demand,” which, in turn, lowers economic growth.

“Demand may return if there is reduction in transmission of the disease or if the fatality ratio proves to be much lower than what we are currently seeing,” SPC Power added.

Semirara Mining and Power Corp. said the restriction by COVID-19 primarily was on transportation that hindered movement of personnel and goods.

However, Semirara said it was hopeful that, with Malacañang issuing a March 13 memo that “ensur[es] unimpeded delivery of energy services,” the operation of its coal mine and coal-fired power plants would be unimpeded as well.

Petron Corp.’s parent firm, San Miguel Corp., said there was “a likelihood” for a lower demand for fuel, particularly with a decrease in the use of private and public transportation, including aircraft.

Pilipinas Shell Petroleum Corp. said operations remained normal, citing a memo from the Department of Energy that ensured the unimpeded delivery of petroleum products, these being products of “basic necessity.”

Phoenix Petroleum Philippines Inc. said sales initially saw an uptick as people prepared for lockdown, but said it anticipated a slowdown as lessened activities made an impact on their retail business.

“In our B2B (business-to-business segment), marine and commercial road transport as well as aviation may be affected,” Phoenix said.

Upstream industry player The Philodrill Corp. said the continuous drop in the demand for oil brought about by the slump in global economic activities, with the series of lockdowns and ban on local and international travels, coupled with oversupply of crude, greatly impacted crude prices, in turn affecting its financial position.