Corporate News

By Victor V. Saulon, Sub-Editor

PetroEnergy says it offered output of 49-MW Tarlac solar farm to Meralco

Posted on June 05, 2017

PETROENERGY Resources Corp. has offered the output of the 49-megawatt (MW) second phase of its solar farm in Tarlac to distribution utility Manila Electric Co. (Meralco) as it aims to reach financial close for the project -- along with two others -- ahead of a target commercial operation date within the next two years, company officials said.

“For Tarlac-2, nag-submit na kami sa [we have already submitted an offer to] Meralco,” said Dave P. Gadiano, PetroEnergy marketing head, in an interview on the sidelines of the company’s briefing for investors and analysts on Friday.

Tarlac-2, which is expected to cost P2.4 billion, is one of three projects that the company has in the pipeline. The other two are the 14-MW Nabas-2 wind farm costing P1.6 billion, and a 5- to 10-MW solar power project in Puerto Princesa with a battery storage component for P855 million.

A fourth project -- the 12-MW second phase -- has reached financial close as banks agreed to lend 30% of the P1.9-billion project cost after PetroEnergy secured a power supply agreement (PSA) with Phinma Energy Corp.

The expansion projects have a total price tag of P6.755 billion spread within the next two years, company officials said.

Mr. Gadiano declined to disclose the price PetroEnergy offered to Meralco, but he said a previous PSA reached between the utility and two solar power developers had become the “reference” for new projects that have no guaranteed feed-in-tariff (FiT).

Under the government’s FiT scheme, solar power investors were awarded a rate of P8.69 for every kilowatt-hour they export to the electricity grid. The installation target for that scheme had been fully subscribed.

Based on Meralco’s previous two PSAs with separate solar power developers, the reference rate should be within a range of P4.69 to P5.39 per kWh. The distribution utility is awaiting approval from the Energy Regulatory Commission for two separate power supply deals.

Carlota R. Viray, assistant vice-president for finance, said should a PSA for Tarlac-2 is closed, the company was looking to secure bank loans for 75% of the project cost, which is the same 75-25 debt-equity ratio it obtained for the first phase.

She said PetroEnergy normally puts in 30% equity in putting up a power plant but banks had been more willing to lend for solar projects. She said the company was also looking for funding options for the new projects.

“Either we source it from the capital market or equity holders, or we will call on the existing lenders for the funding,” she said.

PetroEnergy has become bullish about its renewable energy projects after the slump in oil prices slowed down its oil exploration ventures in the Philippines and in West Africa. The company’s ventures in geothermal, solar and wind power now account for 85% of its bottom line.

The company has a 20-MW geothermal power plant in Sto. Tomas, Batangas under subsidiary Maibarara Geothermal, Inc.; 36-MW wind farm in Nabas-Malay, Aklan and a 50-MW solar project in Central Technopark in Tarlac City.

In 2016, the Maibarara project earned P140.9 million, while the net of Nabas and Tarlac projects hit P134.11 million and P166.7 million, respectively.

“It will be a good year,” Ms. Viray said about the projects’ income prospects this year.

Based on the power plants’ performance as of April, she said the company was close to its projection of posting higher net income this year, although she declined to disclose the target growth rate.

For one, the Tarlac solar farm will be reporting its first full year of operation this year as against last year’s 10-month commercial run. The geothermal project is also expected to be up throughout the year, which compares with the reported shutdown in 2016.

In the first quarter of 2017, PetroEnergy posted a net income of $4.306 million (around P215.3 million), four times more than the $1.009 million in the same period last year. The surge was mainly because of higher electricity sales from renewable energy assets and the slightly higher crude oil revenues from the Gabon, West Africa oil production.

Francisco G. Delfin, Jr., PetroEnergy vice-president, said aside from the new projects in the pipeline, the company was also looking at a mini-hydropower project.

“These four that we have listed are the ones that we have scheduled and planned for. But if for some reason one or two of these do not pan out... we can consider other projects,” he said, citing hydropower and Mr. Delfin said the company might also consider acquiring a wind project that has not yet been developed but has secured a supply agreement with a distribution utility.