In an effort to meet the increasing demand for electricity in the Philippines, The AES Corporation (AES: 12.83 +0.05 +0.39%) plans to expand its Masinloc power generation facility. The company estimates a capital investment of approximately $800 million, obtained from a combination of non-recourse financing and equity. The company plans to double the size of its 660 megawatt Masinloc I coal-fired power plant.
The company noted that the growing power sector in the Philippines requires new low-cost electric generation capacity. Compounding the need for energy, the national economy in that country will likely grow at an average of over 5% year over year through 2015, with demand for electricity expected to grow 5% for the same period. Recently, the Philippines received an investment commitment worth $2.4 billion from foreign companies, providing a boost to economic growth.
In this context, the company is deploying substantial funds for capacity expansion in the Latin American and Asian markets to boost growth and profitability.
The company reported a strong second quarter, largely driven by a combination of better operations at the generation businesses in Asia, increased volumes and prices in Latin America and favorable foreign currency exchange rates. However, lower North American margins and a higher effective tax rate due to the gain of $115 million on the sale of the company’s indirect investment in CEMIG, a Brazilian utility, were partial offsets.
During the second quarter conference call, the company guided full year 2010 earnings to a band of 90 cents to 95 cents per share.
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