SPC to turn over Naga plant when PSALM returns P1.143B

Alfredo Henares, SPC Power Corp. chairman, (second from left) gives an update on the Naga Power Plant situation and the firm’s thrust during Monday’s Annual Stockholders Meeting at the City Sports Club. With him at the meeting are Mishelle Anne Rubio Aguinaldo, SPC assistant corporate secretary (from left); Dennis Villareal, SPC president; and Jaime Balisacan, senior vice president for finance and administration.

SPC Power Corp. is set to turn over the Naga Power Plant Complex in south Cebu to the Power Sector Assets and Liabilities Management Corp. (PSALM).

But before doing so, SPC Power Corp. Chairman Alfredo Henares said they are still waiting for receivables amounting to P1.143 billion from the PSALM.

“We are now in talks with PSALM on the protocol for our turnover. What happened was the transaction was considered null and void. We will return it back to PSALM, and PSALM will return our funds plus necessary expenses,” Henares told reporters at the sidelines of Monday’s SPC annual stockholders’ meeting.

It will be PSALM who will turn over the complex, located in Naga City, to AboitizPower Corp.

In a disclosure last week, AboitizPower subsidiary Therma Power Visayas Inc. (TPVI) said they have received the Certificate of Effectivity (COE) from PSALM to initiate their purchase of the power plant complex.

The COE implements the Sept. 28, 2015 decision of the Supreme Court (SC), which upheld the April 30, 2014 award of the facility to TVPI.

SPC earlier contested the award of the plant to TVPI saying it was “grossly disadvantageous to the government.”

The SC earlier declared as null and void SPC’s right to top the bid of TVPI by five percent.

To recall, PSALM held the first bidding for the Naga Power Plant in 2013, but the first two rounds were declared failed bids as only SPC, the lone bidder, showed up. TVPI joined the third round and won with a bid of P1.089 billion, higher than SPC’s bid of only P895 million.

SPC decided to top TVPI’s bid and paid an additional of P54 million, making their total bid at P1.143 billion. But the plant was still eventually awarded to TVPI in 2014.

According to Henares, the P1.143 billion they are expecting to get from PSALM for the turnover of the facility is still an initial price.

He said it may still increase due to certain expenses over the years.

Review

Meanwhile, AboitizPower is set to conduct a thorough assessment of the 153.1-megawatt (MW) Naga complex which is composed of diesel and coal power plants.

In an interview last week, AboitizPower Executive Vice President and Chief Operating Officer for Distribution Business Group Jose Jaime Aboitiz said they had yet to decide whether to rehabilitate the complex or build a different facility altogether.

“The Naga Plan is not operating right now. That’s a very old plant. We are not sure yet what’s going to happen or what it will be used for,” he said.

If it can be rehabilitated, Aboitiz said the plant would only be expected to provide additional capacity to the listed firm “at a much later date.”

Or, he also said that it is also possible that they would just construct a new power plant in the same complex.

The final decision will only be known after the study and assessment.

Located in Barangay Colon, Naga City, the Naga Power Plant Complex is composed of two thermal power plants – the 52.5-MW Cebu 1 and 56.8-MW Cebu 2 coal-fired units – and one diesel-fired facility that consists of six bunker-C fed generating units.

SPC Power Corp. had planned to construct a new 2 x 150-MW coal-fired power plant at the Naga Plant Complex.

Cash flows

Despite losing the complex, SPC continues to see robust cash flows with their receivable from PSALM.

At the same time, Henares said during yesterday’s stockholders’ meeting that they would be looking for other investments in the power sector.

Henares also said they would be expecting the continued growth in terms of operating results through sustained improvements in the reliability and availability of their existing power facilities; and the anticipated commercial operation of PB104 in the second half of the year; as well as “vigorous but careful” pursuit of new opportunities.

In the renewable energy sector, he said they would be looking into hydropower sources instead of solar power which is already “over-contracted.”

“The Board of Directors has set its sights on other power project opportunities. New hydro power plant projects are presently being considered in the Visayas and other parts of Luzon,” he said.

The listed firm reported that it had earned P1.677 billion last year. The amount is six percent lower than the P1.78 billion it reported in 2016.

The “modest decrease” in SPC’s total comprehensive income was due mainly to the impact of the power system disturbance that hit the Visayas in July 2017 and the expiration of the income tax holiday previously enjoyed by a major associate, according to SPC’s SVP for Finance and Administration Jaime Balisacan.

Despite this, SPC disclosed that dividend payments in 2017 is the highest in SPC’s history representing a payout of 71.4 percent of earnings.SPC is a publicly-listed company that has substantial presence in the Visayas, with diesel plants in Panay and Bohol and a coal-fired power plant in Cebu through its partnership with Kepco.

It also has interests in the distribution sector through Mactan Electric and Bohol Light.