First Gen allots $550M for 2022 capex – BusinessWorld Online

LOPEZ-LED First Gen Corp. has allocated $550 million, or around P29 billion, for capital spending this year, with its renewable energy subsidiary cornering nearly half of the budget followed by its liquefied natural gas (LNG) terminal project.

“In 2022, we’re expecting to spend $550 million in capital expenditures (capex), mainly driven by EDC (Energy Development Corp.), the First Gen LNG terminal project and the Aya project,” said Emmanuel Antonio P. Singson, the listed company’s chief financial officer and treasurer.

“EDC will continue to have high capex this year, and is planning to spend approximately $266 million to fund its growth initiatives, drilling programs and upgrades,” he told stockholders during their virtual annual meeting on Wednesday.

Mr. Singson, who is also senior vice-president at First Gen, said 50% of the budget is allocated for EDC’s growth projects, specifically the 3.6-megawatt (MW) Mindanao 3 binary project, the 29-MW Palayan Bayan binary project, [the] 20-MW Tanawon plant, and energy storage. He also said part of the funds will go to a silica extraction project and wind energy projects.

First Gen’s LNG terminal project has a $135-million capex this year as it completes construction. The facility is expected to be ready to commercially operate in the fourth quarter of 2022.

“For the project Aya, we expect to spend $70 million this year as we continue development work for the project,” Mr. Singson said, referring to the pumped-storage facility.

“For the natural gas platform, $50 million of capex is allotted for pre-development work on Santa Maria,” he added, referring to a proposed power plant, while $30 million is set aside for the maintenance of existing gas-fired power plants.

Based on data from the Department of Energy, the Santa Maria natural gas-fired combined cycle has an installed rated capacity of 1,260 MW under First Gen EcoPower Solutions, Inc. It is located in Brgy. Santa Rita, Batangas City.

Mr. Singson also disclosed First Gen’s expected capex next year.

“In 2023, we’re expecting a lower capital expenditure of $260M, mainly driven by EDC and project Aya,” he said.

“EDC will continue to have capex and is planning to spend approximately $141 million to fund its drilling programs, growth initiatives including Palayan Bayan, Tanawon and innovation growth projects,” he said.

The Palayan Bayan binary plant will produce power using residual brine from an existing steam field.

“Meanwhile, First Gen LNG terminal project will have a capex of $25 million in January 2023 for payment of transactions that closed in 2022,” Mr. Singson said.

He said the company expects to spend $90 million in 2023 for the 100-MW pumped-storage hydropower project Aya in Nueva Ecija for the beginning of its construction work.

In May last year, First Gen said it was expecting to spend around $530 million for 2021’s capex projects, primarily driven by EDC, the LNG terminal project, and the Aya pumped-storage project.

On Monday, First Gen reported a recurring net income of $59 million for the first quarter, down 24.4% from $78 million in the previous year, as its natural gas and geothermal energy platforms recorded lower operating profit.

The company said it generated more power in the first quarter compared with the same period last year, but its 97-MW Avion gas-fired power plant and EDC were hit by unscheduled shutdowns.

First Gen has 3,495 MW of installed capacity in its portfolio, which it said accounts for 19% of the country’s gross power generation.

On Wednesday, shares in First Gen closed unchanged at P20 each. — Victor V. Saulon