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Construction Industry to Rebound in 2021
by Philippine Resources - February 23, 2021
With many infrastructure projects ongoing, the construction industry is set to make a comeback this year.
According to the Philippine Constructors Association (PCA) President Wilfredo Decena, the construction companies can contribute greatly to the recovery of the economy after going down 26% last year, bringing the national gross domestic product (GDP) to a steep 9.5% year-on-year drop.
Recently, Fifth Solutions increased its growth forecast for the construction industry to 9.5% this year, near the 10% growth pre-pandemic.
Decena said that what would contribute to the growth of the economy is timely spending on infrastructure, in spite of the private construction investments, with the national government allocating P1.1 trillion of the P4.5 trillion national budget.
In the PCA regular meeting, he said, “We are hearing of contractors, particularly the small and medium companies, being unable to close any projects at this time. Public investments need to fill the gap until investor confidence is restored.”
Decena also added that contractors should immediately pay since they were already shouldering the costs of any COVID-issues.
The PCA also said that they should rethink the supply chain conditions, and work on the spiralling costs of materials, as well as the possible entry of foreign contractors in the country - which would eventually displace Filipino contractors.
“This is happening while other countries have taken steps to protect and support their local industry amid the global pandemic,” Decena said.
PCA also said that it is further expanding its knowledge and skills program to address the challenges of a shortage of skilled labour and that its members should continue following safety protocols.
Philippine Resources - February 01, 2021
Infrastructure Spending Down In 2020
Spending on infrastructure went down in 2020.According to the data provided by Budget Assistant Secretary Rolando U. Toledo, infrastructure expenses were at P681-billion, 22.7% lower as compared with the previous year.State spending on these projects reached P276.1 billion and that infrastructure spending surpassed P225.5 billion. Toledo said that data included the total spending of the government on infrastructure, including the infrastructure components of transfers to local government units and subsidies or equities to government-owned and -controlled corporations (GOCCs).The realignment of funds last year because of the pandemic caused the government to slash the infrastructure funds. For this year, the budget is expected to reach P1.2 trillion or equal to 5.9% of GDP. “With a multiplier of 2.27, meaning every peso spent creates another P1.27, some 1.7 million jobs can be created to accelerate the recovery. Timely implementation of infrastructure projects will have the biggest impact on our recovery prospects,” said Chua.Emilio S. Neri, Jr., the lead economist at the Bank of the Philippine Islands (BPI), said that the underspending of the government may pose a downside risk to the 2021 rebound. “With businesses still struggling, the lack of fiscal support and public construction may stall the recovery and dampen the demand for capital goods,” Neri said.Oxford Economics said that quarantine restrictions should then be relaxed to allow infrastructure projects to continue.
Philippine Resources - February 10, 2021
DPWH and ADB Sign Agreement on Loan Application for Three Bridges in Marikina City
The Department of Public Works and Highways (DPWH) and the Asian Development Bank (ADB) have signed a Memorandum of Agreement (MoU) for the loan application of the construction of three bridges in Marikina City. Estimated to cost more than P9 billion in total, two of the bridges will be located in Marikina City: the J.P. Rizal–Lopez Jaena Bridge and the Marcos Highway–St. Mary Bridge (formerly J.P. Rizal–St. Mary Bridge). Meanwhile, the third will link Marikina City with Quezon City: Kabayani–Katipunan Avenue Extension Bridge (Marikina–Vista Real Bridge. With a length of 687 metres with a 460-metre main bridge, the J.P. Rizal–Lopez Jaena Bridge will cost P1.61 billion. While the Marcos Highway–St. Mary Bridge spanning 1,477 metres with a 330-metre main bridge will cost P5,74 billion, the Kabayani–Katipunan Avenue Extension Bridge will be priced at P1.81 billion. The latter has a total length of 940 metres with a 485-metre main bridge. According to the DPWH, the Unified Project Management Office (UPMO) Bridge Management Cluster and consulting firm Dasan JV are now working on the engineering designs of these bridges. DPWH also remarked that the local government units are fully supportive of these initiatives.
Philippine Resources - February 26, 2021
New Cebu Port Civil Works to Start Q2 2021
The civil works of the new Cebu international container port will start during the second half of 2021.This was revealed during the online 160th Maritime Forum of the Maritime League, Engr. Romel Pagarom, acting manager of CPA’s Planning and Monitoring Division, said that the groundbreaking of the NCICP is scheduled for August 16.The cost of the project is $118 million (roughly P5.9 billion) with around 35 months or approximately 3 years to build it, he said. But of course, there have been a few delays to the project. The National Economic and Development Authority (NEDA) in 2016 gave CPA, with the Department of Transportation (DOTr) as its lead implementing agency, the clearance to pursue the project. The construction of the project was supposed to start in 2018 but was pushed back to November 2020. Pagarom also added that they face several issues before proceeding with the civil works - Road-Right-Of-Way (RROW) acquisition which will connect the international port to the main road in Barangay Tayud (the MOA has already been drafted), and the need to work on the working visa of the South Korean consultants. Around P132 million is expected to be downloaded to Consolacion’s coffers if the agreement’s implementation would finally push through.“MOA was forwarded by Legal Service to the Office of the Secretary on January 20, 2021, for Sec. (Arthur) Tugade’s approval prior transfer of funds to the LGU of Consolacion. Thus, the PMU (Project Management Unit) will closely monitor the approval of the MOA and preparation of request for fund transfer of P132 million to LGU Consolacion,” said Pagarom.For the working visa of the consultants, project proponents will be sending out a reiteration letter to the Department of Foreign Affairs (DFA). Last January 20, 2020, DOTr issued the notice of award for the US$5.4-million consultancy services for the NCICP project to South Korea-based Yooshin Engineering Corporation.Some of the features of this new facility include a berthing facility with a 500-meter long quay wall that can host two 2,000 twenty-foot equivalent unit (TEU) vessels at the same time; operating facilities and structures for containers; a bridge and an access road; and a dredged waterway and turning basin.This will soon serve international cargoes and the current CIP will be transformed into a domestic port to address the decongestion problems.
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Philippine Resources - May 07, 2021
Semirara Mining Expects Profit Recovery This Year
Semirara Mining and Power Corp. (SMPC), a publicly traded integrated energy firm, expect some profit recovery this year, owing to improved coal and power demand and costs. SMPC chairman and CEO Isidro Consunji said at the company's virtual stockholders' meeting that the company's bottom line will boost as the coal and energy markets rebound from last year's historic lows. “To take advantage of the upswing, we will capitalize on our COVID-19 resiliency and adaptation strategy of focusing on our people, finances, and execution skills. However, given our operational headwinds and until our country reaches herd immunity, it is unlikely that we will return to our pre-pandemic profit level this year,” he said. The business ended in 2020 with a combined net income of P3.3 billion, down 66% from P9.6 billion the previous year. Revenues dropped 36.2 per cent to P23.3 billion as coal production, sales, and prices fell, while energy sales fell due to low power rates and Southwest Luzon Power Generation Corp's (SLPGC) expected and unplanned outages. The coal division of SMPC and the SLPGC plants will be the key drivers of development this year. With remedial steps introduced in Molave North Block 7 (NB7), the coal industry is expected to reach 13 million metric tons, according to SMPC president and COO Maria Cristina Gotianun. “This year, we expect our coal business to perform better on the back of recovering consumption and prices. The remedial measures we have been implementing since December have also allowed us to steadily normalize production. Now that the water seepage at NB7 has gone down to manageable levels, we expect annual production to hit 13 million metric tons,” she said. Due to excessive water seepages, SMPC postponed mining operations in Molave NB7 in early December, reducing coal output by 13% to 13.2 million metric tons. SLPGC is expected to drive profits in SMPC's power market due to higher sales, but Sem-Calaca Power Corp. (SCPC) is expected to produce poor performance. SCPC is the owner of the Calaca coal-fired power plant in Batangas, which it bought from the government in 2009 for $362 million. In the same location, SLPGC operates a 2x150-MW coal power plant. “For this year, we expect uneven results from our power subsidiaries. SLPGC is set to stage a strong profit recovery because of higher plant availability and better spot market prices. Unfortunately, SCPC is likely to deliver disappointing results because of the forced outage of its Unit 2 beginning Dec. 3 last year,” Gotianun said. SCPC's outage was triggered by a seven-month-old generator stator failing. Repairs are currently being negotiated with generator provider GE, according to Gotianun. “While they have agreed to cover the majority of the costs related to fixing the equipment, we are intent on making them shoulder all the necessary expenses. We expect to complete our negotiations within the year,” she said. “In the meantime, we are doing our best to fast track the repair of the generator. If all goes well, Unit 2 can be up and running by the third quarter of this year,” Gotianun said. This year, SMPC will invest P4 billion to rebound from last year's slump. The overall sum will be divided between SCPC and SLPGC for their prevention and repair services, with P2.9 billion going to buy mining and service equipment for the coal industry. Since the COVID-19 pandemic placed a burden on the company's liquidity last year, the management agreed to delay P3.7 billion of CAPEX to this year as part of its cash saving steps.
Philippine Resources - May 07, 2021
Australian Mining Firms Show Interest in the Philippines
According to Australia's Ambassador to the Philippines, Steven Robinson, several Australian mining firms have shown interest in mining in the Philippines, and the recent lifting of a nine-year ban on new mining ventures has paved the way for the possibility of responsible and world-class mining. Robinson said that mining if conducted safely and in accordance with international standards, could help the Philippines recover from the effects of the pandemic's economic impact. “The miners that we already have here—Orica [Philippines], OceanaGold, Red 5 [group], a number of them—are already thinking about what the future holds for them as a result of that ban being lifted,” he said in a virtual briefing on Monday. “They have started to reach out to us just in recent times to express interest in mining across the Philippines. I think that is a very positive step for the Philippines and good for Australian miners here,” he added, when asked to comment on the lifting of the ban. Malacanang recently released Executive Order No. 130, effectively lifting the nine-year ban on new mining deals. The order reversed a clause of then-President Benigno Aquino III's Executive Order No. 79, which was issued in 2012. The EO included a clause prohibiting the issuance of new mining licenses or mining output sharing arrangements unless a new revenue-sharing scheme was established. President Rodrigo Duterte said that the mining tax scheme included in the Tax Reform for Acceleration and Inclusion (TRAIN) Act had already met the EO's requirements. The TRAIN Act increased the excise on minerals, mining goods, and quarry services from 2% to 4%, lowering personal income taxes while increasing consumption taxes. Duterte previously stated that the country had only used about 5% of its natural wealth. According to the Australian ambassador, this demonstrated that there was something that could be achieved in the world to assist in its economic recovery. “The Philippines is a natural resource-rich country, and there’s much that could be done here that will really benefit the Philippines’ recovery, and Australian firms know that,” Robinson said.
Philippine Resources - May 07, 2021
AC Energy Focuses on 12GW of Renewable Energy Projects
AC Energy (ACEN) is operating on approximately 12 gigawatts (GW) of renewable energy (RE) projects, more than double its goal of five GW for 2025, as it strives to become Southeast Asia's largest listed RE network. At COL Financial's briefing, ACEN President and CEO Eric Francia said the 12GW of projects placed the Ayala-led company in a fantastic position to achieve its long-term goals. Solar and wind platforms will make up the majority of the projects it plans to begin in 2021. With 5,200 megawatts (MW), Australia leads the way, followed by the Philippines with 3,400MW, Vietnam with 2,400MW, and India and other Asia-Pacific countries with 900MW. 1,000MW of the 12GW projects in the pipeline are expected to reach financial close in the next six to twelve months, bringing the company more than halfway to its target. By the end of the year, ACEN hopes to obtain regulatory clearance for the influx of foreign funds. The Ayala Group's power arm is maintaining a follow-on offering (FOO) until Friday, with shares priced at Php6.50 per share. “We are grateful for the continued support of our regulators and for the overwhelming response we received from the institutional investors during the book-building process. The exceptional investor support reinforces AC Energy’s position as the region’s leading renewables platform,” Francia said in a statement disclosed to the Philippine Stock Exchange. The FOO is part of a five-step effort by the company to generate Php30 billion for clean energy programs this year. “The FOO completes the company’s successful fundraising efforts this year and allows it to play a meaningful role in the green-led recovery,” Francia added.