Ok, news articles (press releases, actually) are all over the place on Masinloc – here’s one – so let’s take a look and do some back of the envelope calculations, for fun.
First off, I didn’t realize IFC had taken an equity position – the article seems to indicate it did, at 8%. Actually, that’s not too uncommon for plants here. Typically, IFC would have a put option back to AES, but I don’t know the details.
Second, the article indicates the total investment is $1.057 billion so I’m assuming that $127 million difference from that and the purchase price of $930 million is the additional capital expenditure that AES is putting in to get the plant up to snuff.
OK, here comes the back of the envelope work. I just glanced at the WESM weekly reports and although I didn’t do a calculation, just by eyeballing it, it seems the average WESM price this year is about P5.5/kWh. AES has a mix of bilateral contracts and WESM sales to sustain it’s revenue. It’s probably reasonable to presume that their average revenue is about P5.5/kWh?? I don’t know. Maybe. Let’s see how it stacks up against their estimated costs to see if these guys are making or loosing money.
The following is probably wrong – correction, it’s most definitely wrong, so take it for what’s it’s worth.
I’m going to estimate AES total required carrying charges at, say, 21% of their investment – this consists of their return on and their return of capital, income taxes, other taxes, and insurance. Let’s say coal costs $100/metric ton. And I’ve made several other back of the envelope assumptions, using generic, industry assumptions based on some experience. Below is a jpg of the spreadsheet and you can download the spreadsheet itself here – so you can change the assumptions yourself.
Well, these numbers seem to fit OK. Fixed costs come out to be about 50-55% of total costs (a good bit of the O&M is fixed) – that’s about typical for large coal. AES revenue requirements come out at about P5.4/kWh. Interesting. But remember, the numbers are most certainly wrong – I’m just not sure by how much.