Ayala to invest $2.5 B on power projects

MANILA, Philippines - Ayala Corp. (AC), the country’s oldest conglomerate, said its venture into power generation will require as much as $2.5 billion in investments.

The power business, which targets a generation capacity of 1,000 megawatts (MW) in five years, is seen to be a major income contributor to the conglomerate in the long term, a top company executive said.

“1,000 MW is our benchmark now...if we are fortunate enough to land some interesting acquisitions, we can exceed that,” said Eric Francia, AC managing director and head of corporate strategy.

The targeted capacity of subsidiary AC Energy Holdings, Inc. will require $2.5 billion in total investments, with AC expected to shoulder around $500 million, Francia said.

Majority of the funding will come from loans and equity from project partners.

Francia said the 1,000 MW capacity should be under construction in five years.

“We have a balanced portfolio between thermal and traditional load and renewable technology,” he said.

Specifically, 200 MW of the targeted capacity is allotted for renewable energy projects that will require AC to spend up to $150 million, Francia said.

Last year, the conglomerate formalized its entry into the power generation business as it acquired a 50-percent stake in NorthWind Power Development Corp. that owns and operates the 33-MW wind farm in Bangui Bay in Ilocos Norte for P500 million.

For conventional energy projects like coal-fired power plants, AC is looking at a few greenfield ventures and possible expansion of existing power plants, Francia said.

“We are looking at Visayas and Mindanao,” Francia said. Early this year, electricity-starved Mindanao suffered from rotating brownouts due to lack of power generation capacity.

For green energy projects, Francia said around 100-150 MW will be accounted for by hydropower ventures.

To date, AC has partnered with Japan’s Mitsubishi Corp. for the P7-billion Darong solar power project in Sta. Cruz, Davao del Sur.

It is also into a partnership with Sta. Clara Power Corp. for the development of run-of-river hydroelectric power projects across the Philippines.

Solar projects with a total generating capacity of 15-50 MW are in the planning stage.

However, Francia said the company is revisiting its plans given low guaranteed rates on solar energy under the feed-in tariff scheme.

Over time, Francia said AC will develop its expertise in power generation.

AC can pursue a project but it prefers a technical partner to help in the project.

In the long run, the power business will be a major income contributor for the conglomerate.

“Our aspiration is to make it one of the major legs five to 10 years down the road,” Francia said.

Aside from power, the major businesses in the Ayala group are property (Ayala Land Inc.), banking (Bank of the Philippine Islands), telecommunications (Globe Telecom Inc.) and utilities (Manila Water Co. Inc.). It is also into electronics (Integrated Microelectronics Inc.), car dealership (Ayala Automotive Holdings Corp.) and business process outsourcing (LiveIt Solutions Inc.).