Ayala plans to keep majority stake in Kauswagan plant

Published January 11, 2019, 12:00 AM

by manilabulletin_admin

By Myrna M. Velasco

The investment arm of the Ayala group intends to retain majority stake in its 540-megawatt Kauswagan coal-fired power project in Lanao del Norte when the time comes that an acquiring-investor brings in the right check.

AC Energy President and CEO Eric T. Francia
AC Energy President and CEO Eric T. Francia

AC Energy President and Chief Executive Officer Eric T. Francia said “our decision is to retain majority share and that the focus now is more on the power project’s completion,” with him indicating that the sell-down option may be exercised further down in the future.

The plant’s completion to commercial commissioning phase for the first unit may come around June this 2019, then the next three (3) units will be every two months after – also within this year to early part of 2020.

The Kauswagan plant is seen as a very strategic asset that will support the required capacity underpinning for the P52-billion Mindanao-Visayas interconnection project.

When the last link of the nationwide interconnection of the country’s power grids will be concretized as targeted in year 2020, the Kauswagan plant will be the most ready and viable anchor asset on the part of the Mindanao grid.

The US$1.0-billion transmission link-up project had been on blueprints for decades, and it was only this time that it is being advanced with the more focused initiative of the National Grid Corporation of the Philippines.

The Kauswagan power facility of the Ayala-led consortium comprises of four units at 135MW capacity each. The project was developed by AC Energy Holdings, Inc. of the Ayala Group in tie-up arrangements with the Philippine Investment Alliance for Infrastructure (PINAI) Fund and Power Partners Ltd. Co. under corporate vehicle GNPower Kauswagan Ltd. Co.

In coal-fired power developments, the rule-of-thumb cost is at US$2.5 million per megawatt, hence, conservative estimate for the project would hover at $1.350 billion.

This Ayala power facility development, like many of the power plant ventures in the country, also leaned on the 70:30 debt-to-equity financing ratio.

Upon the completion of the interconnection of power grids, the Kauswagan plant’s generated electricity will no longer be confined to capacity wheeling in Mindanao grid, but it could also be shared to Luzon and Visayas grids.