MANILA, Philippines — Lopez-led Energy Development Corp. (EDC) is spending P6.1 billion this year to increase the resiliency of its power assets especially those hit by natural calamities.
EDC vice president for corporate finance Erwin Avante said the biggest component of the capex would go to drilling works in its geothermal asset in Leyte.
“We’re looking at three wells this year. That’s in the program, that’s over a billion pesos already,” Avante said.
Company president and chief operating officer Richard Tantoco, for his part, said the company would be investing heavily on other resiliency projects.
“We’re increasing the seismic specifications of our entire fleet. What we have there still works, so as we maintain the assets, we’ll put in the new ones and we’ll have spares,” he said.
“The second one is the landslide mitigation. We’re spending this year four times the average in the past, that’s P400 million just for Leyte,” Tantoco said.
A small portion of the capex has been allotted for upgrading cooling systems and replacement of pumps of geothermal power plants to improve reliability.
In the first quarter, EDC reported a 56 percent drop in consolidated net income from P3.09 billion to P1.34 billion.
The company attributed the decline to lower revenues, partially offset by higher insurance proceeds and lower interest expense during the period.
Revenues decreased by 15 percent to P8.18 billion.
“Our results for the first quarter was dominated by the impact of Typhoon Urduja that hit Leyte island, site of our biggest business unit, in December,” EDC chief finance officer Nestor Vasay said.
“Generation volume was lower by about 40 percent in Leyte compared to first quarter of 2017, and we continued to incur recovery expenses. However, we are now at 90 percent of the return-to-service activities in Leyte, and are targeting to complete our program by the third quarter,” he said.
That’s why this year, EDC is focusing on improving the reliability and efficiency of its power projects even when natural calamities strike.
Despite the drop in net income, the company’s financial position remained strong with cash balance of P14.27 billion.
“Though our financial predictability initiatives took a step-back due to the two natural calamities that hit us last year, our stable financial footing allowed us to continue making the necessary investments on plant resiliency, operational reliability, and efficiency,” Vasay said.
Once the affected Leyte units are online, the company expects recurring net income to at least match that of last year, Avante said.