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Lopez-led EDC urges gov’t to help develop PHL geothermal industry

THE GOVERNMENT can support the growth of the country’s geothermal industry by helping with the upfront risk that goes with the development of the indigenous energy resource, the president of Energy Development Corp. (EDC) said.
“Globally, geothermal has always grown in government’s hands — whether it’s Costa Rica, Mexico… because government has unlimited balance sheet,” Richard B. Tantoco, EDC president and chief operating officer, told reporters.
“So if government could do anything to help, not just us but any of the 13 players that have concession areas, it’s to help with that upfront risk,” he added.
Mr. Tantoco made the statement in response to a request for comment on the country’s standing in global geothermal power generation, which has slipped a notch lower this year after being overtaken by Indonesia in the second spot. The US remains the world’s biggest.
“FiT (feed-in-tariff) will always help because you have a PPA (power purchase agreement) with the government. But really, if you look at geothermal — historically and worldwide — the biggest issue… is in the upfront risk,” he said.
EDC is the country’s largest geothermal company, delivering 1,457.8 megawatts (MW) of clean and renewable energy.
In Latin America, Mr. Tantoco noted two lending institutions have an exploration fund that offers a “grant-to-loan” program.
“So I’m going to give you money. It’s free if you drill. If the well doesn’t produce, you don’t owe me anything. It’s a grant. If it produces and later on it becomes a commercial project, you pay me back. It becomes a loan,” he said.
He said a similar policy could be adopted by the Philippines to spur the growth of the local geothermal industry.
Mr. Tantoco said a few weeks ago, EDC executives had a meeting with one of the top officers of the World Bank group ahead of its issuance of a policy recommendation on renewable energy.
He said EDC representatives also had a meeting with the International Finance Corp. to offer their insights on how to expand the renewable energy industry.
“Their comment was: ‘We see your company as a beacon. You’re like a shining example. What can we do to support you.’ We said: ‘We want you to unleash risk financing and work with the government to simplify the permitting system,’” he said. — Victor V. Saulon

PLDT chief says not keen on partnering with Globe for ‘independent’ cell tower company

By Patrizia Paola C. Marcelo, Reporter
PLDT, INC. is not interested in partnering with rival Globe Telecom, Inc. for the creation of an “independent” cellular tower company.
PLDT Chairman, President and CEO Manuel V. Pangilinan said the company does not see any benefit or need to share any of its network assets.
“At this time, we don’t see any benefit or need to share any of our existing network elements, including our towers,” Mr. Pangilinan said last May 10.
PLDT Chief Corporate Services Officer Ray C. Espinosa said any possible sharing for new towers will depend on the network rollout of PLDT.
“The decision whether we will unload our own towers is actually more financial question for us and a business question as well. Financially I don’t think we need to unload these towers, which I understand Globe said they needed to because of their own unique financial situation, so our situation is not the same in respect of the driver for moving our towers to a third party,” Mr. Espinosa said.
“New towers, we’re willing [to adopt one tenant] but it must be towers where our network is being rolled out. We cannot just base our stations in areas where Globe says this is where we build up the [tower]. It has to be consistent with our network design and network rollout. But obviously we can if it saves us cost, why not?” he added.
Globe last month said it is open to partnering with or being in a consortium with rival PLDT for the creation of an “independent” cellular tower company.
Globe President and CEO Ernest L. Cu had said that working with PLDT and other future players would reduce capital spending for new cell sites.
Globe announced in February that it was in talks with certain parties to form an independent cell tower company and divest some or all of its tower assets, to help speed up the build and deployment of cellular towers in the Philippines, and as part of its network expansion and optimization plan.
Globe General Counsel Froilan L. Castelo had that an independent tower company will help reduce the difficulties in getting permits for the construction of cell towers. Both Globe and PLDT have cited the difficulties in getting permits as the barrier for the construction of more cell sites that will improve coverage.
The country only has 16,000 cell sites, serving a population of more than 100 million people.
The government proposed in January a “common tower policy” where independent firms would build cell towers which would then be leased to PLDT or Globe.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

Tan’s Eton Properties focusing on leasing business

ETON PROPERTIES Philippines, Inc. (EPPI) is looking to introduce pocket retail developments and co-working spaces, as the real estate arm of the Lucio Tan Group aims to boost its recurring income from commercial and office developments.
In a statement, EPPI said it is planning pocket retail developments in Ortigas, Quezon City, and San Juan, as well as a mixed-use commercial development along Roxas Boulevard in Manila.
The property company will also start offering flexible co-working offices at the upcoming NXTower I in Ortigas central business district.
Last year, EPPI spent P4 billion in capital expenditures, up 14% from the P3.5 billion spent in the year prior. Among its projects were the West End Square in Makati City, Centris Cyberpod Five and expansion of Centris Walk in Quezon City.
It also broke ground for NXTower I, a 30-storey office building, and Eton City Square, a commercial strip in Eton City in Sta. Rosa, Laguna.
During its recent stockholders’ meeting, EPPI officials said that “expanding the company’s footprint, streamlining its operations, and strengthening its commitment to exceptional customer service will sustain the market’s interest in its various projects and steer the company forward.”
EPPI’s net income reached P348 million in 2017, slightly lower than the P390 million recorded in 2016 due to a drop in residential property sales.
However, rental revenues grew 9% to P1.4 billion last year, from P1.3 billion in 2016. Rental revenues accounted for 62.2% of EPPI’s total revenues, as the lease contracts were renewed at higher rates for the business process outsourcing offices.

Leave the movie at the bedroom door say Cannes star couples

CANNES — Hepburn and Tracey, Bogart and Bacall, Joel Coen and Frances McDormand: movie magic often has real-life love stories behind it, but star couples at Cannes say you must tread carefully when mixing work and romance.
Spanish Oscar winners Penelope Cruz and Javier Bardem, who have replaced Angelina Jolie and Brad Pitt as the smouldering A-list pair on Cannes’ red carpet, have already teamed up on nine movies but said they were in no hurry to rush back to a film set together.
After the premiere of their new thriller, Everybody Knows, which opened the festival, Cruz said dryly that while she enjoyed working with her husband, she wouldn’t want to do it all the time.
“It’s not something that we plan on doing every two years.”
Cruz said she and Bardem, who have two children, were paid equally for the film and have strict ground rules about leaving the push-and-pull of their personal relationship far from the set.
“It would not make your life better, I think, if you used certain things from your private life (on a film). So the fact that we know each other and trust each other so much only helps,” said Cruz.
SHOP TALK, PILLOW TALK
China’s Zhao Tao, who influential movie website IndieWire last week called “one of the greatest actresses in the world,” has made a half dozen films with her spouse, director Jia Zhangke, including Touch of Sin and Mountains May Depart.
Their latest is another Cannes contender, Ash is Purest White.
She calls her husband “Director Jia” while shooting, just like the rest of the cast, keeping their shop talk and pillow talk sharply separate.
“When I come home and we get back to our own family we have nicknames for each other — but that is something that just belongs to both of us privately,” she said.
Zhao said their relationship had grown more “dynamic” and collaborative since they made their first picture together, Platform, in 2000.
“Back then, if the director thought a scene was good, I tended to think ‘Yeah, it’s good enough,’” she said. “Now it’s more of a dialogue about the characters — how I want from a female perspective to make a character come alive. I think he’s very responsive to my opinions and suggestions.”
Jia, who won the Golden Lion top prize at Venice in 2006 for Still Life, told AFP their sometimes hard-fought consensus covered even ostensibly trivial details like costumes.
He said their shared love of Quentin Tarantino’s Kill Bill movies led the couple to occasionally borrow some of the eye-watering colors of its costumes.
They revived the look in Ash is Purest White, whose first chapter set in the 2000s recalls Tarantino and the Hong Kong action movies that inspired him with their ultra-stylish violence.
“We were just on the same page,” Jia said of his wife.
‘REALLY TERRIFYING’
It’s often a cinema passion project that brings lovers together in the first place, as with A.B. Shawky and the producer of his debut feature Yomeddine, Dina Emam.
“We didn’t start dating until maybe right before production,” Emam told reporters in Cannes.
The film, set in an Egyptian leper colony using non-professional actors who were not able to read or write, proved to be more of a bonding experience than they bargained for.
The two survived a “really terrifying” shakedown by amateur security guards, Cairo’s byzantine bureaucracy, and the vagaries of crowdfunding a complex project that surprised everyone by getting into Cannes’ vaunted competition.
“It was a gruelling shoot, I can’t sugarcoat it,” said Shawky, at 32 the youngest director in the Cannes competition.
Emam agreed, “There’s no amount of planning that could have prevented the things that happened on this shoot — I think maybe we were a little cursed.”
But after their baptism of fire, Shawky and Emam decided they were ready to take the next step.
“As soon as we were done with the film we decided ‘I think we’ve gone through the hardest thing we’ll ever go through in our lives — I think marriage will be a piece of cake,’” she quipped. — AFP

Lay Bare aims to triple store network in 5 years

By Arra B. Francia, Reporter
HOMEGROWN SALON chain Lay Bare is bringing accessible waxing services to Southeast Asian countries, targeting to triple its current size in the next five years.
The Hilario family founded Lay Bare in 2006, after sisters Fiona and Monique wanted to offer better hair removal services after disappointing experiences at neighborhood salons.
Lay Bare employs the sugaring technique for its waxing services, where honey, sugar, and citrus fruits are used instead of hot wax. The company claims that this technique saves customers from experiencing cuts and burns, in addition to having smooth skin for two weeks.
Twelve years and more than a hundred stores later, the company has evolved into one that also advocates for the benefits of hair removal.
“We wanted to keep our message simple — hair removal is our passion and waxing is our expertise. Being passionate about hair removal is about advocating and educating the public about the benefits of hair removal, and why our all natural product and patch wax technique is superior compared to others,” Lay Bare President and Chief Executive Officer Juan Paolo Hilario said in an e-mail correspondence.
The company was not without birth pains. For the first six months of operations, Lay Bare failed to make a profit. It was then that the siblings contacted editors of major national publications to have their services known. This proved to be a turning point for the business, as it became a hit among beauty bloggers and allowed it to capture a bigger market.
Mr. Hilario and his sisters, who sit as co-chairwomen, opened up Lay Bare for franchising in 2008. To-date, the company has a total of 109 stores, 107 of which are in the Philippines. Of this, 64 are franchised.
Lay Bare has two stores in the United States, and are co-owned by the company.
Over the next five years, Lay Bare looks to pursue an expansion program that will bring the company overseas.
“We are looking at tripling our current size in terms of locations in the next five years. We want to be present not only all over the Philippines, but also become the region’s neighborhood waxing expert,” Mr. Hilario said.
The company has yet to finalize how much it will be spending for this Asian expansion program, but Mr. Hilario noted that they would have to get creative to meet their target.
Lay Bare is also preparing to introduce products to complement its hair removal services.
“We believe it’s good that the general public has been more informed with they being hair-free is good lifestyle choice. It also has allowed us to reflect on how we do things, and to remind ourselves the need to continuously innovate,” Mr. Hilario said.
Amid increasing competition, Lay Bare will continue to focus on the customer experience that has made it a dominant player in the market.
“Lay Bare’s purpose is to really make a mark in the lives of people by providing expert and quality services, focused on the complete customer experience. As long as we feel we have yet to fulfill this mission, we will continue charting a course that will guide us until we do,” Mr. Hilario said.

Amaia Skies Shaw to turn over units in Q3

AMAIA LAND Corp. expects to turn over units to homeowners at Amaia Skies Shaw in Mandaluyong City within the third quarter of the year.
In a statement, Amaia Land said the condominium project is already 95% completed.
Amaia Skies Shaw will have 1,348 units in 34 residential floors, while four floors are allotted for parking and retail space. Condominium units are sized from 18.6 to 36.2 square meters.
The company said the project’s location is ideal for homeowners who want a place near their workplaces in Ortigas and Makati central business districts. Amaia Skies Shaw is along Shaw Boulevard corner Samat Street in Barangay Highway Hills.
“Condo living used to be a luxurious novelty reserved only for those who could afford. However, current lifestyles make it an ideal option for driven young professionals and many hardworking families because of the convenience it offers. Amaia Land acknowledges this and we are thus inspired to give them the quality life they work hard to achieve,” Raizel Matibag, senior project development manager at Amaia Land, was quoted as saying in a statement.
Amaia Land is a wholly owned subsidiary of Ayala Land, Inc. (ALI) which caters to the affordable market segment.

Yields on Treasury bills, bonds seen mixed after BSP rate hike

YIELDS on government securities to be offered this week will likely end mixed amid market expectations of a big issuance from the Bureau of the Treasury.
The government is offering today P15 billion worth of Treasury bills (T-bills). Broken down, the BTr will raise P5 billion and P4 billion via the three- and six-month papers, respectively, and another P6 billion in one-year T-bills.
The bureau will also offer P10 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of six years and 11 months.
Traders interviewed last week said yields on the T-bills will likely end mixed since investors still prefer short-dated securities.
“For the bills, yields on the 91- and 182-day papers might be lower by around five basis points,” a trader said in a phone interview, adding that bids for the one-year bills may rise by “around five basis points.”
However, another trader expects rates at the T-bills auction to “be lower by [five] to 10 basis points.”
The first trader said the longer-dated one-year bills might receive tepid demand from investors as the preference is still on the short-term papers.
“On the demand side, we still expect to see strong demand on the 91-day and 182-day notes as most clients still prefer short-dated tenors,” the first trader said.
During last week’s T-bills auction, the Treasury fully awarded the three- and six-month papers, but opted to fully reject bids for the one-year T-bills. The average rate of the 91- and 182-day notes slipped at 3.439% and 3.958%, respectively, from the previous auction.
Meanwhile, the traders expect the rate of the seven-year T-bonds to climb.
“For the seven-year [papers], the rate might be at 5.75-5.85%,” the first trader said.
The first trader sees the rate of the reissued papers landing between 5.75% and 5.85%, while the other gave a 5.60-5.85% range.
The government raised P7.932 billion from the fresh seven-year bonds auctioned off on April 11 with a 5.75% coupon.
“The higher yield forecast for [seven-year] paper reflects the uncertainty on when the government will put the trigger for the next big issuance,” the second trader said.
At the secondary market on Friday, the 91-day, 182-day and 364-day T-bills closed at 3.4319%, 3.8321% and 3.916%, respectively, while the seven-year bond was quoted at 5.7394%.
Investors are expecting the government to look for a “window of opportunity” to tap domestic funding, be it a bond swap or a retail bond issuance, ANZ Research said in a note.
Last month, National Treasurer Rosalia V. De Leon said the government is looking for a “good window” to raise more financing.
“This auction of [seven-year] bond may see slightly softer demand but bond redemption of P130.5 billion on May 23 will help,” ANZ Research added.
Meanwhile, the first trader said the rate hike by the Bangko Sentral ng Pilipinas (BSP) will not greatly affect this week’s auction as it was already priced in previously.
The BSP on Thursday hiked key rates by 25 basis points amid accelerating inflation and robust economic growth. Rates now stand at 3.75% for the overnight lending rate, 3.25% for the overnight reverse repurchase rate, and 2.75% for the overnight deposit rate.
However, the second trader noted that today’s T-bill auction “might be one of the best this year” especially after the rate hike.
“That’s one less uncertainty in the market,” the trader added.
The Treasury is holding two auctions per week this quarter — one for T-bonds and another for T-bills — to reflect increased borrowing requirements. The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product. — Karl Angelo N. Vidal

The Eternity Between Seconds the big winner at CineFilipino film fest


ALEC FIGURACION’s The Eternity Between Seconds, a film about two strangers meeting at an airport and creating a fleeting, yet lasting connection, earned the top prizes in this year’s CineFilipino Film Festival including Best Film and Best Direction.
Earning five awards, The Eternity Between Seconds — which stars singer Yeng Constantino and seasoned actor TJ Trinidad — also took home technical awards namely Best Cinematography, Best Editing, and Best Sound Design.
Meanwhile, Therese Anne Cayaba’s Delia and Sammy — about an old, faded actress who tries to look for family who will take care of her difficult husband before she dies — took home awards for 3rd Best Film as well top acting awards for Rosemarie Gil (Best Actress) and Jaime Fabregas (Best Actor).
Also one of the night’s big winners was Dwein Baltazar’s Gusto Kita with All My Hypothalamus, which tells the story of four men’s interactions with a mysterious girl, as it won four awards: 2nd Best Film, Best Ensemble, Best Musical Score, and Best Production Design.
The awards ceremony for CineFilipino Film Festival was held on May 12 at the Kia Theater in Quezon City.
Below is the full list of winners:
• Best Film: The Eternity Between Seconds
• 2nd Best Film: Gusto Kita with All My Hypothalamus
• 3rd Best Film: Delia and Sammy
• Best Direction: Alec Figuracion for The Eternity Between Seconds
• Best Actress: Rosemarie Gil for Delia and Sammy
• Best Actor: Jaime Fabregas for Delia and Sammy
• Best Ensemble: Gusto Kita with All My Hypothalamus
• Best Supporting Actress: Ritz Azul for Mata Tapang
• Best Supporting Actor: Nico Antonio for Delia and Sammy
• Best Screenplay: Mga Mister ni Rosario
• Best Cinematography: The Eternity Between Seconds
• Best Production Design: Gusto Kita with All My Hypothalamus
• Best Editing: The Eternity Between Seconds
• Best Musical Score: Gusto Kita with All My Hypothalamus
• Best Sound Design: The Eternity Between Seconds
• Short Features Best Film (Open Category): Gabi ng Kababalaghan
• 1st Runner-up Film (Short Features Open Category): Siyudad sa Bulawan
• Short Features Best Film (Student Category): Santa Nena by Tim Rone Villanueva of De La Salle-College of St Benilde
• 1st Runner-up Film (Short Features Student Category): Mark and Lenny by Gio Potes of University of the Philippines-Diliman
• Supershorts Best Film: Orlie by Lino Balmes
• 1st runner-up (Supershorts Category): Bente Kwatro Awras by Eunice Maximo — ZBC

Male stars must take pay cuts says Salma Hayek

CANNES — Hollywood star Salma Hayek said Sunday that male stars will have to take pay cuts if they are serious about equality for women.
The Mexican-born actress, a leading voice in the #MeToo and Time’s Up movements, said highly paid male stars would have to make sacrifices.
“It is not just the producers” who have to change if the huge pay gap is to be closed. “It is actors too,” she said.
“Time’s up. You had a good run but it is time now to be generous with the actresses,” she told a Women in Motion talk at the Cannes film festival.
“If actors ask such inflated fees it will leave nothing for actresses. If the movie’s budget is $10 million, the (male) actor has to understand that if he is making $9.7 million, it is going to be hard for equality,” Hayek added.
“Otherwise they will kill the movie,” she warned.
“I will be hated for saying this,” Hayek joked. “I hope I can get another job…”
Hayek — best known for Desperado and indie hit Beatriz at Dinner — had accused mogul Harvey Weinstein of threatening to “break my kneecaps” after she spurned his advances on the set of her film Frida.
The actress and producer, who says she has sold a raft of female-led projects “that I had been trying to make for 10 years” since the Weinstein scandal shook up Hollywood, said real change was happening.
“The men are terrified. The predators are hiding. You feel this very palpable atmosphere.”
Hayek said it was hard to hire known female writers and directors in the US now, as studios are snapping them up trying to catch up with the public mood.
Women were “jumping from the writers’ room to being show runners” on television series.
‘BE IMPATIENT!’
But she warned that “pay disparity is going to take a while… because they still want to pay you the exploitative salary they paid you before.”
Which was why women had to “be impatient,” she urged.
“We should have been angrier soon. We should have come together sooner — that is what did it,” Hayek, who was nominated for an Oscar for Frida, told reporters.
She said Weinstein harassed her on the movie, which she produced, demanding that she do a “gratuitous” nude scene with another actress.
The disgraced mogul contested her claim, with Hayek insisting it was part of a ploy by his lawyers to try to discredit the “women of color who complained about him.”
She said they had also targeted the testimony of Black Panther star Lupita Nyong’o knowing that “women of color are believed less. It is a proven fact unfortunately. Luckily there are so many of us, otherwise we would have been disbelieved.”
Hayek said men should not be afraid of change in the gender balance.
“It is a very exciting time for men now. Because men have the opportunity to rethink what it means to be a man, and this comes with a lot of freedom.
“A lot of beautiful peaceful men have been the victims of the bullying of men who think that the identity of a man has to do with violence,” the actress added.
“A lot of men have suffered from that and have had to become that way too when they didn’t want to go in that direction,” said the 51-year-old.
Hayek is a longtime champion for change in the film industry, helping set up the Women in Motion talks at Cannes four years ago with her husband, Kering luxury goods boss Francois-Henri Pinault.
“We couldn’t have done it without a few good men, like my husband,” she said, adding that it was “so sexy and unnerving when he comes up with ideas that I should have.” — AFP

What may end HK property boom? Here are the triggers

HONG KONG property companies such as Sun Hung Kai Properties Ltd. and CK Asset Holdings Ltd. are bracing for the first increase in the city’s prime rate in more than a decade. A higher prime rate, which sets the upper limits on mortgages, could damp surging housing prices in the world’s least-affordable real estate market.
“Whenever a prime rate hike happens, it will cause the property market to rethink the sanity of paying HK$10 million ($1.3 million) for 200 square-foot apartments,” said CLSA Ltd. analyst Nicole Wong.
Rising US rates are putting pressure on banks to raise, as they also face a domestic squeeze from the monetary authority draining liquidity to defend the Hong Kong dollar. Here are some possible trigger points to gauge the timing of a possible increase in the prime rate, which the city’s major banks have held at 5% since November 2008.
FED THRESHOLD
In the last cycle of higher rates in 2005, the main banks raised their prime rate days before a widely expected Fed increase that took tightening to 175 basis points. The Fed has already boosted its benchmark rate by 150 basis points since it started raising in December 2015. That means the next Fed increase could be enough to get Hong Kong banks moving.
Ronald Man, a strategist at Bank of America Merrill Lynch in Hong Kong, says higher prime rates could end the bull run on house prices. “Our house view is Hong Kong home prices will grow 5% this year, followed by a 15% correction in 2019-2020,” he said.
LIQUIDITY SQUEEZE
The Hong Kong Monetary Authority (HKMA) last month was forced to intervene after the currency breached HK$7.85, the lower end of its trading band, for the first time since 2005. The wave of buying has mopped up some of the abundant liquidity that has fueled the housing boom. It also put pressure on borrowing costs with the three-month interbank rate known as Hibor gaining for 13 days through May 2 to the highest since 2008. For now liquidity remains robust with the aggregate balance of the city’s banking system at almost HK$130 billion. Pressure remains on the territory’s currency and any further intervention could send liquidity much lower and prompt banks to act on prime. “The threshold is HK$100 billion to trigger banks to raise prime,” said Raymond Cheng, a property analyst at CGS-CIMB Securities.
Tighter liquidity will provide “a more conducive environment for Hong Kong interest rate normalization,” said HKMA Chief Executive Norman Chan after the Federal Reserve kept rates on hold yesterday. “The HKMA reminds the public to manage risks prudently to prepare for possible volatility in local interest rates and asset markets.”
MIND THE SPREAD
The difference between the prime rates and the one-month Hibor rate is another signal that pressure for a prime rate increase may boil over. In the previous two cycles, HSBC Holding Plc’s prime rate began to rise after the spread between the two narrowed to less than three percentage points. “If history is any guide, we need to see 1-month Hibor breaking above 2% before banks tinker with prime rates,” Ryan Lam, head of research at Shanghai Commercial Bank wrote in a note to investors on April 24.
“Interest rates in Hong Kong are all set to spike in the months ahead,” DBS Bank Ltd. economist Samuel Tse wrote in a note to investors on April 26. “The prime lending rate will likely reach 5.75% by end-2018 in anticipation of more rate hikes in the US this year.”
DEVELOPERS FLUSH
To be sure, Hong Kong’s property companies are probably better positioned than in the past to weather a prime increase, even if it does cool housing prices, which have already gained about 9% this year. Hong Kong’s biggest developers enjoy low debt levels and have so much liquidity that they are “capable of financing buyers themselves,” if banks pull back, said Bloomberg Intelligence analyst Patrick Wong. — Bloomberg

Higher coal prices seen to lift SMPC profit this year

By Victor V. Saulon, Sub-Editor
SEMIRARA MINING and Power Corp. (SMPC) expects its full-year 2018 net income to remain positive, with coal sales offsetting the “downward pressure” on its power generation business, company officials said.
Junalina S. Tabor, SMPC chief finance officer, told reporters last Friday that growth this year would be driven by projections of higher coal prices at no lower than $80 per metric ton.
“With higher Newcastle index coupled with higher exchange rate with the depreciation of the peso, so [the price] expectation [is] higher,” she said, referring to the international benchmark that dictates coal prices. “Then it also drives our local prices.”
Ms. Tabor said prices last year was around $60 per metric tons and even touching $50 in the first half. She also said the company’s assumption is for the peso to trade at around P52 per US dollar this year.
Coal sales account for more than half of integrated energy company’s revenues, with power generation making up at least 40% and cement contributing the rest.
Ms. Tabor did not give a profit guidance this year. As of the first quarter, SMPC posted a consolidated net income after tax of P4.57 billion, up 3% from P4.42 billion in the same period last year.
SUSTAINED GROWTH
Separately, SMPC said in a statement that it expects “sustained growth” this year despite the scheduled and unplanned shutdowns in the first quarter of its four power plants under Sem-Calaca Power Corp. (SCPC) and Southwest Luzon Power Generation Corp. (SLPGC).
“Even with the plant shutdowns, we are on track to deliver full year growth. We expect to offset our replacement power costs in the succeeding quarters from our insurance claim,” SMPC President Victor A. Consunji was quoted as saying in a statement.
Unit 2 of SCPC was offline for the most of the first quarter because of a scheduled preventive maintenance and technical inspection relating to its rehabilitation program. Unit 2 of SLPGC was closed for preventive maintenance.
The former resumed normal operations on March 17 while the latter was back online on April 16.
Unit 1 of SCPC and unit 1 of SLPGC were forced to go on unplanned shutdowns in early March as the former required the removal of slags from its boiler while the latter exhibited abnormal equipment vibration.
Unit 1 of SCPC went back online on March 17 but Unit 1 of SLPGC will remain offline for repairs until August this year.
With the protracted shutdown of SLPGC’s unit 1, SMPC said it has started buying replacement power from the Wholesale Electricity Spot Market in the last week of March, which had minimal impact on its first-quarter earnings.
SLPGC has business interruption insurance that covers the loss of business income as a result of damage to the insured asset, the company said.
“The final amount will still be determined by the insurance adjuster appointed by SLPGC’s reinsurers but SMPC expects that it will substantially reduce the impact of replacement power costs to SLPGC’s profitability,” it added.
Mr. Consunji said the generated output of SLPGC’s unit 2 is enough to serve its contracted capacity, except for a few hours during peak demand or as needed by its offtakers.
“We anticipate higher coal sales this year because of healthy demand from local and international consumers. The foreign exchange rate and strong coal prices will also prop up our bottom line,” Mr. Consunji said.
The company said a “bright spot” would be its newly formed ancillary service business.
SLPGC was issued a certificate of compliance in early March by the Energy Regulatory Commission for its 50-megawatt (MW) modular gas turbine power plant.
SLPGC is now finalizing its contract with the National Grid Corporation of the Philippines, which will allow the SMPC subsidiary to provide ancillary services to the grid operator.
“While awaiting the ancillary service contract to take effect, SLPGC is bidding its gas turbine capacity in the electricity spot market,” the company said.

Peso likely to weaken as dollar climbs further on positive data

THE PESO will likely weaken this week as the dollar is seen to remain “relatively strong” amid mixed US economic data as well as geopolitical concerns.
On Friday, the peso dropped to P52.19 versus the greenback from Thursday’s finish of P51.80 following “dovish” remarks from the Bangko Sentral ng Pilipinas, saying the 25-basis point hike will suffice to curb the rising inflation.
Week on week, the peso also fell from its P51.675 finish on May 4.
Markets were closed on Monday for the barangay and Sangguniang Kabataan elections.
Land Bank of the Philippines (LANDBANK) market economist Guian Angelo S. Dumalagan said in an e-mail: “The dollar is expected to remain relatively strong this week, despite likely mixed US economic reports, amid bets of more hawkish statements from US policy makers and potentially softer economic data from Japan and the Eurozone.”
The greenback, Mr. Dumalagan said, may start the week on a negative note as it is seen to correct due to profit taking following its “unexpectedly strong” performance last week.
“However, it might be tempered by upbeat US economic reports on consumer sentiment and consumer expectations,” Mr. Dumalagan added, noting that the “likely hawkish” remarks from US Federal Reserve (Fed) officials James B. Bullard and Loretta J. Mester may also temper the weak dollar.
Consumer sentiment in the US was at 98.8 in a preliminary reading in May. This was slightly higher than the 98.5 expected in a Reuters poll of economists.
“These developments are expected to reinforce views that the US Federal Reserve remains on track to hiking rates a few more time this year,” Mr. Dumalagan said.
Toward the end of the week, the peso may weaken as the dollar moves sideways with an upward bias due to likely hawkish speeches from Fed officials and US economic data due for release.
“The dollar is expected to move sideways with an upward bias amid possibly more hawkish remarks from various US policy makers, mixed US economic reports,” LANDBANK’s market economist said, adding that expectations of weaker economic growth data from the Eurozone and Japan may also pull down the dollar.
Meanwhile, Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, said the geopolitical concerns in Iran as well as the impending meeting of US President Donald J. Trump and North Korean leader Kim Jong-un will be considered by investors.
“I think everybody’s looking at the Iran issue including the US-[North Korea] meeting,” Mr. Asuncion said. “Oil prices will [also be a] key.”
On Tuesday last week, Mr. Trump said the US was withdrawing from the 2015 nuclear deal negotiated by the Obama administration, Reuters reported.
So far, six other countries remain in the accord, including China, France, Germany, Iran, Russia and UK, which placed controls on Iran’s nuclear program.
Mr. Trump also announced that he will be meeting with Mr. Kim in Singapore on June 12.
“Positive results from the meeting may encourage investors further to invest not just in the Philippines but the whole region as well,” Mr. Asuncion said. “It may strengthen the peso in the long run.”
For this week, Mr. Dumalagan sees the peso moving between P51.80 and P52.40 versus the dollar, while Mr. Asuncion gave a P52-P52.50 range. — Karl Angelo N. Vidal with Reuters

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