SM Group mulls entry into power generation

MANILA, Philippines - The SM Group will study whether or not it is allowed to venture into the power generation sector given its affiliation with the National Grid Corp. of the Philippines (NGCP), the country’s transmission highway operator.

SM Investments Corp. chief financial officer Jose Sio said this is among the issues the SM Group is looking at to ensure that there are no thorns that may arise when it pursues power generation projects.

“What we’re interested in is power generation,” Sio said.

“That’s the area that we want to resolve so we will see,” he told reporters when asked about the possible conflict of interest if the SM Group proceeds with its power generation ventures given its affiliation with NGCP.

NGCP is headed by Henry Sy Jr., the son of SM Group owner Henry Sy.

Sio said nothing is final yet and that the SM Group is still studying what is legally feasible.

“If there is that an investment opportunity, we will see if it is appropriate and we will see if it is legally feasible. What I’m saying is that these are the areas that we’re interested in,” Sio said.

He said if there are no legal hurdles or thorny issues, the SM Group can proceed with its investments this year or next year.

However, he said that for now, the Group is not keen on investing in power projects in the Southeast Asian region or anywhere outside the Philippines.

“No, we are not power experts,” he said when asked if they are interested in venturing in the region for power investments.

The Electric Power Industry Reform Act (EPIRA) has a cross-ownership provision between generation and transmission sectors.

The Sy Group has partnered with oil giant Chevron for possible geothermal projects nationwide such as Cebu, Bohol, Palawan and Mindanao.

The company’s APC Group also partnered with Chevron for a 100-megawatt geothermal power plant in Kalinga, Apayao, slated to be operational by early 2018.

The Department of Energy (DOE) is also studying the planned ventures of the SM Group in the Kalinga project to determine if there would be violations in the EPIRA.