First Gen Corporation
reported an attributable net loss to parent of $13.3 million for the first semester of 2011 due to an impairment charge by Energy Development Corporation
(EDC) for its Northern Negros Geothermal Plant (NNGP). The P5.0-billion impairment was a noncash loss that resulted from decommissioning the 49-megawatt power plant. The write-down resulted in EDC’s loss contribution to First Gen of $25.6M in the first semester of 2011. In contrast, EDC contributed earnings of $36.5M in the same period last year.
In addition, First Gen Hydro Power Corporation
contributed lower revenues due to limited water availability coupled with a decline in the Wholesale Electricity Spot Market prices. Its year-to-date net income contribution of $1.3M was significantly lower compared with $17.9M in the same period last year.
Despite reduced contributions of EDC and FG Hydro, First Gen’s consolidated revenues were higher by $38.3M, or 6.3% to $646.8M in the first semester. The increased revenues reflected the higher dispatch and fuel prices of the 1,000-MW Santa Rita and the 500-MW San Lorenzo natural gas power plants. For the first six months of 2011, the gas plants delivered stable attributable earnings of $37.6M.
The loss from EDC was cushioned by lower interest expenses resulting from reduced debt levels and interest rates at the parent and at Red Vulcan Holdings Corporation, the company that directly owns 40% of EDC. At the parent level, interest expense was lower by $9.5M, from $26.6M to $17.1M for the first half of 2011, with the full payment of the P5.0B bond in July 2010 and a partial buyback of First Gen convertible bonds.
“…The stable earnings of the First Gas plants and the lower financing costs of the parent helped cushion the effects of the writedown. We are quite confident that First Gen will be reporting positive earnings by the end of the year,” First Gen president Giles Puno said.