Ayala prepares to expand power, rail portfolio

CONGLOMERATE Ayala Corp. is readying potential power expansion projects beyond 2016—when it is expected to assemble a 1,000-megawatt attributable power portfolio—while citing its continued interest in new infrastructure deals like a Manila-Legazpi railway line despite the looming shift in administrations.

John Eric Francia, president and CEO of Ayala unit AC Infrastructure Holdings Corp., said in a briefing Friday that much of the focus was being placed on the power business, which will be a “significant” earnings contributor in five years.

The company already has six power projects, including a 540-MW coal-fired power plant in Kauswagan, Lanao del Norte, that starts construction this year, which brings its total attributable by capacity to about 700 MW, Francia said.

As noted, this will hit 1,000 MW by 2016 and Francia said another 500-MW in expansion projects could bring that attributable capacity to 1,500-MW.

He did not specify any timeline for expansion.

The move was in line with bringing up the contribution of the power business to over 10 percent of Ayala’s equity earnings on or before 2020.

“Hopefully, power will become a core business of AC [Ayala Corp.] at that point in time,” Francia said.

The company has also been making inroads in terms of new infrastructure projects launched under President Aquino’s public private partnership program in 2010.

Ayala won the administration’s first PPP deal, the 4-kilometer Muntinlupa Cavite Expressway (formerly Daang-Hari SLEX Link road), which Francia said would be completed by June this year, missing its first quarter 2015 deadline, partly due to right-of-way issues.

Francia said commercial operations at MCX can only begin after government issues the substantial completion certificate and Toll Operation Certificate.

The company continues to eye new infrastructure deals, but Francia noted that timing would be an issue and that the private sector would be more cautious in participating if a project cannot be awarded within the same administration.

“It’s going to be difficult for a project to cross over [during] a shift in administration by the middle of 2016 and if you look at history it takes anywhere between six and 12 months to successfully bid out and award large complex projects,” Francia said.

“You don’t want to keep it close to the shift in administration. I would argue that the second quarter [of 2015] is very critical for the government to really launch these large and complex projects,” Francia said.

Francia said the group was eyeing larger PPP deals on offer like the North South Railway project-South Line, which aims to link Manila to Legazpi City in Albay.

It earlier joined a consortium that includes the Aboitiz, SM and Megaworld groups for the massive P123-billion Laguna Lakeshore Expressway Dike project.

Apart from this, a tandem between Ayala and Metro Pacific Investments Corp. already won the automated fare collection system and Light Rail Transit Line 1 Cavite extension PPP deals.