EDC loses 'billions' in Leyte devastation; Yolanda damage may wipe out 2013 profit

The Energy Development Corp. in 2011 declared P5 billion loss in impairment of property, plant and equipment on its geothermal operations. Two years later, it looks like history is repeating itself for the Lopez company.

According to the industry grapevine, the country's largest geothermal power producer suffered "billions" in damages that would surpass the reported P4.5-billion Yolanda-related losses sustained by the Philippine Phosphate Fertilizer Corp. for its neighboring complex in Leyte.

The EDC has not responded as of this writing to questions about the financial impact of the super typhoon on its operations and, more important, when it expects the 650-megawatt power complex will be back on the grid. According to the grapevine, Yolanda could wipe out the P4.2-billion net income for the first half of 2013 that the listed company had earlier reported.

EDC already gave broad hints of the magnitude of the devastation in its November 18 disclosure, admitting that its three power plants had sustained "significant damage" from 300-kilometer winds and lashing rains whipped by the strongest typhoon to have smashed into the country.

"Almost all the company's buildings (e.g., offices, administration buildings, warehouses, laboratories, staff housing facilities) have sustained varying degrees of damage," the disclosure said. And, cryptically, EDC said it had already written the National Power Corp. on the "force majeure" provisions of its power purchase agreement with the state agency.

The New York Times, sending a correspondent to the site, reported a few days later that the company was studying whether to replace the four destroyed cooling towers or build new, more durable replacements. In either case, the reconstruction work would last months, and threatens to turn the December 24 re-electrification promise of government into mere campaign bombast.

Still, there is perhaps a silver lining to this Black Swan-event somewhere, judging from how two company insiders picked up EDC shares amid the terrible developments. EDC director, British Jonathan Russell, snatched a pre-Thanksgiving bargain, buying 220,000 battered EDC shares at P4.58 each.

Not to be outdone, EDC president Richard Tantoco scrambled a week later, acquiring in one day 400,000 shares between P5 and P5.06 each, higher by 10 percent but still more than a third down from its year-high of P7.90. Tantoco, a former mergers and acquisitions specialist, even has his downside covered -- the shares were purchased in behalf of his wife Vicky.