SMC Power bares huge fuel losses

SMC Global Power Holdings Corp. (SMCGP), the power unit of diversified conglomerate San Miguel Corporation (SMC), seeks government approval for a power rate hike to recover the P15 billion losses it incurred from operating its power plants amid soaring fuel prices.

SMC president and chief executive officer Ramon S. Ang pointed out that the company had already absorbed more than P10 billion in losses last year.

In a statement on Monday, the company said its Sual Coal and Ilijan Natural Gas power facilities logged combined losses of P15 billion from 2021 to date due to high global coal prices and unilateral natural gas supply restrictions from Malampaya.

The company noted that coal prices in the global markets have breached the $400 per metric ton (MT) level. It exceeded the $60 to $65 per MT price range and long-term outlook contemplated in 2019 when its power supply agreements (PSA) with Meralco was executed.

Gradual cost recovery eyed

SMCGP has sought a temporary and partial cost recovery relief only for the losses it incurred from January to May, through a power rate increase on its contract capacity under the PSAs to be amortized for six months.

The company said it will allow the power generation facilities to continue sourcing the necessary fuel and allow it to viably operate and supply power.

While this will result in a temporary increase in prices, the Grid would continue to have an adequate supply of reliable base load power to keep the lights on for the millions of individual consumers, households and industrial facilities.

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