URC to sell excess power by 2014

By VG Cabuag. BusinessMirror

Posted at Jan 25 2013 08:48 AM | Updated as of Jan 25 2013 04:48 PM

MANILA, Philippines - Snack food manufacturer Universal Robina Corp. (URC) said it will start selling excess power to the national grid by next year as the company hopes to generate its own electricity using the by-product of its sugar business.

Chairman James Go said the firm will sell to the grid about 4 to 5 megawatts (MW) during the first year of operation of the power plant which uses bagasse, a sugarcane by-product, to produce power, and about 16 MW to 22 MW after the third year. Construction of the power plant will take three years.

On Thursday shareholders of the Gokongwei-led company that makes C2 iced tea drinks and snack food like Chippy and Granny Goose Tortillos, approved the company’s foray into power generation.

A huge chunk of URC’s revenues still come from its branded food groups and only a fraction came from agro-industrial products such as the sugar and flour milling businesses.

The power venture entails the construction of a 40-MW biomass fed power plant out of the company’s Sonedco sugar mill in Cabangcalan, Negros Occidental. The company will need only half of the capacity of the power plant for its operations.

“We have five to six sugar mills, but we will use initially only one, but our biggest,” Go said during the company’s special stockholders’ meeting

URC’s Sonedco mill has a capacity of 10,000 tons of cane a day, a third of which is turned to bagasse.

“With the new technology, you can not only generate electricity for our own use but also sell to the grid.”

The company still has to construct the said power plant and it still has to go under competitive bidding process, but Go estimates that the company will invest some $1.5 million for every megawatt generated or around $60 million (P2.44 billion) for the said project.

“We will use internally generated funds for this project and everything has been funded,” he told reporters after the meeting.

For 2013, URC allocated P5 billion for its capital expenditures, some P4.3 billion of which will be used for the installation of new lines to expand capacities in the snack foods and grocery products. It also intends to modify existing beverage facilities in the Philippines, new beverage and bakery lines in Vietnam, and expansion of salty snacks, chocolates, biscuits and wafer lines in Thailand, Indonesia and Malaysia.

It will spend P445 million for its commodity group, mostly comprised of maintenance cost, while P250 million is earmarked for the agro-industrial group for its farm expansion and handling facilities for feeds division.

The said capital expenditure was slightly lower than the P5.13 billion that it earmarked during the previous year, but that included the construction of an ethanol plant in Negros Oriental.