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| Into energy |
When it comes to power generation, the groups that readily come into minds are the Aboitiz and Lopez groups which have been entrenched in the power industry for generations. With the slew of reforms which was jumpstarted by the Electric Power Reform Act during the Ramos years and continuing to the present, the country has seen new formidable entrants to the power sector which bodes well for the industry and the country.
Which of these groups would come to dominate, or at least become a significant player in the energy sector, has been the topic of speculation by energy watchers.
Ramon Ang of San Miguel Corporation is being keenly watched as he is credited of transforming a stodgy food conglomerate into an energy player. He started by taking over Petron Corporation, and using this as a vehicle, expanded into Malaysia. Next, a huge chunk of Meralco, then some moves into power generation. Now Ang is talking big about upstream oil production.
The other large conglomerates are also suspects. The Ty group through a unit of GT Capital Holdings has been busy acquiring or putting up power assets mostly in the Visayas. The Consunjis have been testing the waters through a power unit of Semirara Mining Corporation. Even the group of Andrew Gotianun through Filinvest Development Corporation is putting up a 600 MW coal plant in Misamis Oriental.
What about--Ayala Corporation?
As of now, that might raise eyebrows as the group is better known for its iconic master planned property developments and banking (through Bank of the Philippine Islands). But since then, it has successfully branched into telecoms which gives the dominant carrier a run for its money, and water service.
Judging from its recent pronouncements and actions, the group seems determined to stamp its mark in the energy industry.
At the recent stockholders' meeting, Eric Francia, the president of AC Energy Holdings of the Ayala group, revealed that the company has already committed US$325 m for four power projects already acquired or in advanced stage of development. The amount is part of the $700 m earmarked for upcoming power projects in the next few years.
Ayala debuted into energy a few years back by acquiring a 50% stake of 33 MW Bangui wind project from the original developers. At present, the group's equity interests in projects include a 20% of GNPower which is developing a 600 MW coal plant in Bataan; two 135-MW coal plants in Batangas in partnership with Trans-Asia Oil and Energy Development; and a mini-hydro project somewhere in Luzon.
These could represent just a start.
“Our strategy of record for AC Energy is to have a combination of conventional (or fossil-fuel) and renewable energy resources," Francia explained, which summed up a strategy combining reality to have conventional power sources together with renewables and hard-nosed business acumen which Ayala is renowned for.
That's why, according to Francia, the group leans towards competitively-priced conventional sources, but over time it sees a balanced portfolio of conventional and renewable sources. But that should take time. That makes sense.
Given its track record on other businesses by taking a long term view, the Ayala group cannot be ruled out as a dominant energy player, even if it has no previous record. When it acquired a small telecommunication outfit named Globe-Mackay, it had no telecom experience, but nevertheless transformed it to second-largest telecommunications firm GlobeTelecom. It acquired a much maligned government water service unit and developed it to a reliable--and profitable--service provider Manila Water Corporation despite having no prior exposure to the water distribution business.
Most importantly, it has the necessary capital firepower to undertake costly projects like power generating plants.
The oldest conglomerate may yet turn out to be the youngest dominant power player.
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