In a disclosure to the Philippine Stock Exchange, First Gen vice chairman and CEO Peter Garrucho Jr. said the improvement in earnings could be attributed to lower professional fees with the conclusion of the Santa Rita plant’s dispute with its contractor Siemens.
Garrucho said the favorable settlement of the dispute with the Malampaya consortium, lower administrative expenses, and lower net interest expense also helped in posting improved earnings for the said period.
According to the First Gen official, the positive outcome of Santa Rita’s arbitration case with Siemens and the dispute with the gas sellers generated millions in savings from professional fees alone.
He noted that First Gen’s administrative expenses went down by $8 million from the same period last year.
Net interest expense was also lower by $4 million due to higher interest income earned from its robust cash position.
"We are pleased that Sta. Rita and San Lorenzo have finally settled their long-standing disputes resulting in substantial benefits to the company. With these developments, our gas plants will provide strong platforms for First Gen’s growth aspirations," Garrucho said.
First Gen’s consolidated revenues rose to $725 million, up by 19 percent. The increase was primarily due to improved dispatch and higher fuel prices.
Dispatch was significantly higher for San Lorenzo at an average of 80 percent as of September 2006 compared to 77 percent in September 2005.
Garrucho said this was a result of the operation of the wholesale electricity spot market (WESM), which commenced in June this year.
Sta. Rita registered almost the same dispatch in comparison with the same period last year due to scheduled plant outages.
First Gen operates principally through its power plants Sta. Rita and San Lorenzo in Batangas, Bauang in La Union and Agusan in Bukidnon.
Last Sept. 6, 2006, it successfully bid for the 112 megawatt Pantabangan/Masiway hydroelectric power complex which will be turned over by Power Sector Assets and Liabilities Management Corp.