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Ayala Corp. ramps up energy portfolio to boost income

AC Energy Holdings Inc. is targeting 1,000 megawatts (MW) in generating capacity with new coal-fired and renewable energy (RE) projects to make the power unit a major contributor to Ayala Corp.'s recurring income, a ranking official said Friday.

"We have two large scale projects targeted to close within the next six to 12 months," AC Energy president John Eric Francia told reporters in a briefing Friday.

"But we're hoping to get the financial close before the end of the year to start construction," he added. 

The 1,000 MW goal was set in 2011, which Ayala Corp. thought was achievable at that time, AC Energy president John Eric Francia told GMA News Online in an e-mail message.

"Over the past three years, we had the benefit of a deeper appreciation of the supply-demand dynamics, as well as better visibility with respect to our platforms," he said.

“We believe we have a robust pipeline that may result in exceeding our 1,000 MW goal," he added.

Subsidiary AC Energy is part of the new business concerns of Ayala Corp. – that include education, automotive, and infrastructure – and is considered crucial for the oldest Philippine conglomerate to breach the P20-billion net income goal by 2016.

Francia said the unlisted businesses is expected to contribute 15 percent to the target net income, with 10 percent coming from power. 

AC Energy is planning to build a coal-fired power plant with 405 MW to 540 MW capacity in Kauswagan, Lanao del Norte.

"We plan to build three to four units of 135 MW plants. AC Energy will be underwriting the entire equity requirement estimated to reach $200 million to $300 million," he said, noting the size of the plant has yet to be finalized.

AC Energy teamed up with Nauru's Power Partners Ltd. Co. for the construction and operation of the thermal power plant.

$300M for Bataan power plant

"This will get us very close to 1,000 MW," Francia said.

AC Energy is also co-developing the 600-MW expansion of a 600-MW coal-fired power plant in Mariveles, Bataan with GNPower Mariveles Coal Plant Ltd. Co.

"We'll be taking in roughly 50 percent equity participation and our attributable equity will be 600 MW, so we could potentially surpass the 1,000 MW target once that's closed," said Francia, who is also managing director at Ayala Corp.

He said the power subsidiary may spend about $300 million to expand the Bataan power plant.

In January, AC Energy acquired a 17-percent stake in GNPower. Other parties in the Bataan plant are Power Partners and Sithe Global Power LLC, a company owned by investors of The Blackstone Group.

Francia said the company is keen on increasing the renewable energy portion.

"Some of our RE platforms could go beyond existing capacities... but it depends on how much the government will allow in the next feed in tariff allocation," he said.

To date, Ayala group has committed $430 million to grow a pipeline of energy related projects – through acquisitions and greenfield projects – to nearly 1,000 MW in gross generating capacity.

"We continue to be on the lookout for more potential investments and we would be prepared to deploy another $400 million in this space moving forward," chairman and CEO Jaime Augusto Zobel de Ayala said during the company's stockholders meeting held in Makati City the same day. – VS, GMA News