MRC Allied to buy stake in solar power project
As published on BusinessWorld
MRC ALLIED, Inc. is acquiring a 15% stake in the 50-megawatt (MW) Sulu Electric Power and Light Philippines, Inc. (Sepalco) solar power plant project in Palo, Leyte, further boosting its diversification into the energy sector.
The listed firm signed a memorandum of understanding to buy a minority stake in the solar power project for $5 million. MRC Allied President and Chief Executive Officer Gladys N. Nalda said they hope to close the deal by the end of this week.
“We saw it as an opportunity for us to be part of an operating plant. Our commitment was to help them with the PSAs (power supply agreements)… Gusto lang namin na maka-enter na kami, and we will help them improve their financials,” Ms. Nalda told reporters in a press briefing after a special shareholders’ meeting in Makati City on Wednesday.
Sepalco is located in a 70-hectare property in Palo, Leyte and has a total of 188 solar panels. The plant is connected to the existing 69 kilovolt (kV) transmission line of the National Grid Corp. of the Philippines. MRC Allied noted that it is the biggest solar project in Eastern Visayas.
The acquisition marks MRC Allied’s first operating plant, and helps the company breach its 200-MW target in 2017. The company already has two solar projects under the pre-development stage, with 100 MW in Clark, Pampanga and 60 MW in Cebu.
Ms. Nalda noted the deal allows MRC Allied to raise its stake to as high as 51%, which would give it a controlling stake in the solar project.
“We have an opportunity to increase our shareholdings naman. But we want to work out muna namore than WESM (Wholesale Electricity Spot Market) sila, hopefully controlling,” she added, referring to the fact that Sepalco currently supplies only to WESM.
MRC Allied Chief Finance Officer Alejandro A. Palacio said Sepalco incurred a net loss of P6 million in 2016, its first year of operations, as it has been throwing its capacity to WESM.
Asked if Sepalco has a feed-in tariff (FiT) rate from the Department of Energy (DoE), Ms. Nalda said the company has lodged an appeal with the DoE.
“(They’re) still not letting go of their FiT prospects. Pero sa amin we will push through with our bilaterals regardless kung ano ang kanilang maging appeal,” Ms. Nalda said.
The company is trailing a “Buy and Build” strategy in a bid to hit a capacity of at least 1,000 MW by 2022. The mix of acquisitions and building own plants would help MRC Allied fast-track its revenue generation.
“It takes about two to three years or even five years to construct a plant, but we cannot wait for that. So to speed up our revenue generation and the cash flow, we also opt for the buy option. So we just have to improve the operating capacity and the financials,” Mr. Palacio said.
Asked about other possible acquisitions for the year, Ms. Nalda said the company is eyeing least six more deals, with two set to be completed by year-end.
“Yung sa anim, combination siya ng solar and others… Meron operating, meron nasa pre-dev(elopment). Pero shovel-ready na sila,” she said.
MRC Allied has also engaged former Energy Secretary Jericho L. Petilla and former National Electrification Administration administrator Edita S. Bueno as board members, increasing the number of seats to nine from the current seven.
Incorporated in 1990 as a real estate developer, MRC Allied is now spinning off its property assets into special purpose vehicles to focus on its diversification into the energy sector.
Shares in MRC Allied added 0.5 centavos or 1.35% on Wednesday to close at 37.5 centavos each.