First Gen income flat at P12.4 B in 2021

By Myrna M. Velasco – March 21, 2022, 4:39 PM
from Manila Bulletin

Lopez-led First Gen Corporation registered a flat growth in income at P12.4 billion ($252 million) last year due to uncertainties ignited by soaring fuel prices in the world market that had impacted the overall operation of its electric generating assets.

The company qualified that while it benefited from higher electricity sales from its gas-fed as well as hydro generating assets and boosted by higher prices in the Wholesale Electricity Spot Market (WESM), these have been practically muted by lower earnings of its subsidiary Energy Development Corporation (EDC).

According to First Gen President and COO Francis Giles B. Puno, the company “generated higher revenues in 2021 as we saw power demand recover to pre-pandemic levels. Unfortunately, revenue growth was also an effect of higher fuel prices experienced all over the world and the supply restrictions in the grid that reflected in high spot market prices.”

The Lopez firm’s revenues last year topped P106 billion ($2.167 billion), which inched up by 18-percent or roughly P15 billion, from P91 billion ($1.83 billion) in 2020.

Puno emphasized that their gas plants had to run on imported liquid fuel due to gas restriction incessantly experienced at the Malampaya gas field last year.

And while that has been a dilemma for most of 2021, he guaranteed that “we are working to address gas supply uncertainty and are confident this will be addressed once our LNG (liquefied natural gas) import terminal operates this year.”

For the gas platform of First Gen’s power generation businesses, the recurring earnings posted hovered at P9.7 billion ($198 million) last year, which climbed moderately from P9.2 billion ($184 million) in 2020.

“The older natural gas-fired plants, the 1,000 MW Santa Rita and the 500 MW San Lorenzo, reaped the benefits of lower income tax rates under the CREATE Law and lower interest expenses from regular debt service payments. These were partially offset by lower operating income from the 420 MW San Gabriel power plant due to outages and higher replacement power,” the Lopez firm stressed.

It qualified that “from an attributable net income to parent of P9.3 billion ($187 million) in 2020, the gas platform increased to P9.8 billion ($199 million) for 2021.”

Conversely, the profitability of its subsidiary-EDC — which houses its geothermal, wind, and solar assets – had dipped by 8.0-percent to P4.0 billion ($82 million) last year from a heftier P4.5 billion ($90 million) in 2020. On the other hand, the income contribution of its hydro platform had inched up to P180 million ($4 million) in 2021 from P70 million ($1.4 million) in the prior year.

First Gen narrated that while its 97-megawatt Avion power plant “had its share of plant damage issues in 2021, it still benefitted from high electricity sales in the early part of the year as it supplied the grid with supplemental power during constraint periods.”

It further noted that Unit 2 of the Avion plant “was discovered to have incurred a damage in its gas compressor last August after a routine inspection. The unit was quickly replaced and restored to full commercial operation by late October.”

Nevertheless, in December 2021, it had been Avion plant’s unit 1 that also suffered technical glitch and it was just brought back to operation in February this year.