The Philippines has long been one of the top producers of geothermal energy in the world. Our subsidiary, the Energy Development Corporation, holds the largest number of geothermal power plants in the country with over one thousand megawatts of renewable, 24/7 power.
In the third quarter of 2018, EDC’s Leyte plants have resumed normal operations after the Leyte plants were hit by two natural calamities in 2017—a 6.5 magnitude earthquake in July 2017 and Typhoon Urduja, which poured 15 days’ worth of rainfall over a period of 24 hours in December 2017. The faster-than-expected recovery of the Leyte plants to their pre-earthquake levels generated higher sales volume and revenues
EDC’s geothermal plant portfolio is composed of the following geothermal energy-powered plants and subsidiaries:
• The 140.0-MW Bacon-Manito (BacMan) Geothermal Project;
• The 588.4-MW Unified Leyte Geothermal Project;
• The 123.0-MW Tongonan Geothermal Project;
• The 172.5-MW Palinpinon Geothermal Project;
• The 49.4-MW Nasulo Geothermal Project;
• and The 106.0-MW Mindanao Geothermal Project.
Revenues from EDC’s geothermal platform increased to PHP 32.8 billion in 2018 from PHP 28.3 billion in 2017, an increase of PHP 4.5 billion or 15.9 percent. This can be attributed to higher generation volumes as a result of the geothermal plants’ higher sales volume and higher average selling prices during the year. The higher sales volume of the geothermal assets was mainly due to the faster-than-expected recovery of the Leyte plants in the third quarter of 2018 from damages brought about by the aforementioned calamities that hit the plants in 2017. BacMan’s higher contracted demand in 2018 likewise contributed to the higher sales volume. The higher revenues was further supplemented by higher ASPA revenues due to the full-year ASPA contracts of the Sogongon and Nasulo Power Plants, and the onset of the ASPA contract for the Okoy Power Plant in the last quarter of 2018.
Consequently, as a result of the geothermal platform’s higher revenues and the collection of insurance proceeds from the earthquake and typhoon damages, net income improved by 20.8 percent to PHP 8.2 billion in 2018 from PHP 6.8 billion in 2017. This was partially offset by higher spending towards resiliency efforts, and power plant operations and maintenance.
Overall generation was higher in 2018 compared to 2017. This can be attributed to the swift completion of key activities in operation. Planned outages for 2018 were shorter as most major and minor preventive maintenance were completed ahead of schedule. Apart from the completion of maintenance activities, the Leyte plants resumed operations earlier than expected in 2018, following the damages left by an earthquake in July 2017 and Typhoon Urduja in December 2017. By the third quarter of 2018, majority of the generation milestones related to return-to-service repairs were completed ahead of schedule, restoring the plants back to their pre-earthquake levels. This was made possible by the hard work and persistence of the geothermal teams.
Furthermore, EDC was also able to secure 19.7 MW of new contracts in 2018 under the RES license of BacMan Geothermal, Inc (BGI). Due to the earlier restoration of the damaged power plants and higher contracted demand, EDC’s geothermal plants sold over 8,073 GWh of electricity in 2018 compared to 7,187 GWh in 2017.
BGI was awarded the Certificate of Exemplary Compliance by Philippine Electricity Market Corporation (PEMC) in recognition of attaining the 14th rank in WESM Rules Compliance related to the Must Offer Rule (MOR) and Real-Time Dispatch (RTD) Schedule for the fourth quarter of 2018. The award is given to WESM participants that demonstrate continuous compliance with WESM regulations and those that have had minimal number of violations to the MOR and RTD Schedule during the period.
The award was given last January 24, 2019 at Novotel Manila Araneta Center during the celebration of the WESM Compliance Office Fellowship Night. The BacMan power plant was the sole geothermal plant to receive the award in the event.
ANNUAL GEOTHERMAL ENERGY DAY
Recognizing EDC’s founding anniversary, the Province of Sorsogon released Executive Order No. 01 declaring the 5th of March as Annual Geothermal Energy Day. This is the second time such a recognition was given to geothermal energy in EDC’s host provinces. The first one was from the Province of Negros Oriental, which released Executive Order No. 22-18, likewise declaring March 5 as Annual Geothermal Energy Day. These recognitions from EDC’s host communities highlight their continued support towards EDC as a leader of geothermal energy, a clean and sustainable energy option that creates a positive impact on their lives.
“On August 7, 2018, EDC’s Board of Dirctors approved the voluntary delisting of the company… As of December 31, 2018, First Gen holds a 45.6 econmic stake and a 65.0 percent voting stake in EDC.“
EDC’S VOLUNTARY DELISTING
On August 7, 2018, EDC’s Board of Directors approved the voluntary delisting of the company from the PSE. The board likewise approved the conduct of a Voluntary Delisting Tender Offer at PHP 7.25 per share for up to 2,040,006,713 of EDC’s common shares held collectively by the public, representing approximately 10.9 percent of outstanding common shares.
EDC’s Tender Offer Price of PHP 7.25 per share represented a 46.5 percent premium to the closing share price the day prior to the announcement. The independent financial adviser, KPMG, issued an opinion based on an independent valuation. It stated that the Tender Offer Price “is fair and reasonable from a financial point of view”.
As of December 31, 2018, First Gen holds a 45.7 economic stake and a 65.0 percent voting stake in EDC. This move by EDC is geared towards the company’s strategic growth, enabling greater flexibility on its dividend policy and growth strategy.
EDC is currently pursuing several local expansion projects across Luzon, Visayas, and Mindanao. EDC also continues to explore and assess growth opportunities in places such as Indonesia, Chile, Peru, and other countries in the Asia-Pacific and Latin America regions. EDC owns a number of geothermal concessions in these areas, and various pre-development works are on going.