SMC Global Power suffers P1.831-B net loss in 1st half

Published August 5, 2022, 2:25 PM

by Myrna M. Velasco

SMC Global Power Holdings Corporation (SMCGP), the power generation investment arm of San Miguel Corp., suffered a net loss of P1.831 billion in the first semester this year, wiping out its hefty income of P12.219 billion in the same period last year.

Based on figures released, SMCGP said its income from operations had likewise plunged by 26-percent to P12.763 billion from the year-ago level of P17.158 billion.

In terms of sales, the San Miguel firm indicated that this had grown significantly by 70 percent to P102.580 billion from P60.279 billion within the same period last year.

The uptick in the company’s sales revenues had been mainly attributed to the higher power rates due to the escalating prices of fuel commodities that are used in electricity generation.

In fact, SMCGP disclosed early this week that the magnitude of operating losses it incurred since last year due to swelling fuel prices already hovered at P15 billion, hence, it has been batting for recovery of at least P5.2 billion of such losses which accrued from January to May this year – and that will entail a rate hike of P0.28 per kilowatt hour (kWh) that shall be passed on in the electric bills of consumers for six months.

Th cost recovery petition lodged by SMCGP with the Energy Regulatory Commission (ERC) had been anchored on the power supply agreements (PSAs) it had underwritten with Manila Electric Company (Meralco) – and those cover 330MW capacity of its Sual coal-fired and 670MW capacity of its Ilijan gas-fired power plant.

SMCGP argued that the cost escalation being sought in the pass-on rate of its PSAs is warranted because the upswing of fuel prices in the international market had been out of the ordinary – chiefly as an outcome of the lingering Russia-Ukraine war.

The rate hike application is still pending with the ERC; and this has already been drawing opposition from various consumer-advocacy groups.

The San Miguel power firm expounded that “the unprecedented global price increases were triggered by extraordinary circumstances, such as disruptions in the commodities markets brought about by the Indonesia coal export ban, the Russia-Ukraine conflict, and continuing value chain issues from the COVID-19 pandemic.”

On gas supply intended for the Ilijan plant, SMCGP conveyed that “questionable and unilateral notices of gas restrictions which caused the deration or the ceasing of delivery of available capacity, had severely affected the plant’s net generation capacity and forced it to source costly replacement power from the Wholesale Electricity Spot Market (WESM).”

Given the extended astronomical rise in fuel prices, the company stated that its power plants can only continually supply reliable power to the grid if it will be granted regulatory imprimatur to partly recover its costs on fuel procurement.