EDC income up 26.5% to P7.38 billion in 2009

MANILA, Philippines - Lopez-led Energy Development Corp. (EDC), the country’s largest geothermal power producer, posted a 26.5-percent increase in its core net income last year to P7.38 billion from P5.83 billion a year earlier.

Company president and COO Richard Tantoco attributed the significant improvement in core profit to the hike in total revenues, more favorable exchange rates, and the impact of the renewable energy (RE) law on its accounting treatment.

He traced the higher earnings primarily to the P2.73-billion increase in revenues from electricity sales and drilling services, and the complete turnaround from a P9.4-billion foreign exchange loss in 2008 to a P1.3-billion foreign exchange gain in 2009.  

These offset the write-down of P2.9-billion deferred tax assets arising under the RE Law, the P2.22-billion increase in operating expenses mainly due to steam augmentation activities, and the impact of the P3.1-billion one-time arbitration award in 2008 which reduced expenses and increased other income that year.

“Although the one-time write-down in deferred tax assets affected our income, it was a necessary step before we can realize the fiscal benefits afforded by the RE law. The long wait for the law’s implementation is well worth it. With the assistance of the RE law’s incentives, we will push hard to develop new geothermal areas in the country and expand what we have in a sustainable manner,” Tantoco said.

He said the company is proceeding smoothly with the redenomination of debt stock and upcoming retirement of its Miyazawa II and other on-lent loans.

“Our loan currency mix is now predominantly peso denominated after the full payment of our Miyazawa I loan and the raising of P25.1 billion through fixed corporate notes and bonds last year. After a decade, we are finally eliminating third currency risk by paying off our yen loans and converting most of our debt to pesos,” he said.  

EDC used a portion of the funds it raised to prepay the seven-year Power Sector Assets and Liabilities Management Corp. (PSALM) staple financing for the acquisition of Tongonan I and Palinpinon plants, purchase of state-of-the-art drilling rig, and repayment of ¥12-billion Miyazawa 1 loan in June 2009.  

Last year’s revenue from drilling services increased 16.8 percent to P848 million from P726 million in 2008.

“We are committed to deliver best value for our stockholders by improving further on operational efficiencies and sustaining robust profits and cash flows. We will keep our balance sheet healthy to maintain the confidence of financial institutions as we expand our footprint both here and abroad,” Tantoco said.

EDC owns and operates geothermal steamfields in Leyte, Negros Oriental, Negros Occidental, Sorsogon and North Cotabato .

It has a combined capacity of 1,199 megawatt. It also operates the 701.5-MW Unified Leyte, 192.5-MW Palinpinon, 106-MW Mindanao and 49-MW Northern Negros geothermal power plants.