SM’s next big bets: Geothermal energy, logistics sectors

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SM Investments Corporation's optimism on the logistics sector reflects its push to expand to provincial areas

MANILA, Philippines – SM Investments Corporation (SMIC) is bullish about its businesses in the renewable energy and the logistics sectors.

“We need to support the Department of Energy’s (DoE) goals to achieve 50% by 2040 and I think we do have the access to that as far as the concessions and the geothermal area,” SMIC President and Chief Executive Officer Frederic DyBuncio said in a briefing on Wednesday, April 30.

Geothermal energy is renewable, sourced from the earth’s heat.

SMIC fully acquired the Philippine Geothermal Production Company, Inc. (PGPC) in 2023 after buying out Allfirst Equity Holdings Inc. PGPC is behind the first geothermal field in Southeast Asia — the Tiwi plant in Albay, which has been up and running since 1979.

PGPC is currently operating two steam fields — TIti, which generates about 110 megawatts daily, and Mak-Ban (Makiling-Banahaw) in Laguna and Batangas that produces 210 megawatts a day.

DyBuncio said that their geothermal unit last week started drilling in a new concession area in Malinao, Albay — just an hour away from its Tiwi plant. “That is the first greenfield exploration that we’re doing,” he said.

SMIC in 2024 disclosed that PGPC got 5 new concessions from the DoE, opening up opportunities for sites.

“We’re exploring each one of them but it takes time to be able to drill and to make things commercially viable,” DyBuncio said on Wednesday. “We actually purchased our own drilling rig [from Houston]… and that’s really a commitment for us.”

Meanwhile, SMIC is also optimistic about the growth prospects of its logistics businesses, led by 2Go and Airspeed.

DyBuncio described 2Go as a “more complete” logistics firm, offering services from ships to special containers among others, making it “one of the largest” players in the sector. He noted that 45% of 2Go may be attributed to its shipping business, thanks to the demand to be able to serve from Luzon to Visayas and Mindanao.

“We are the only shipping company that carries passengers from Manila all the way down to Visayas and Mindanao so that to us is a competitive advantage… [it] gives us additional ability to sort of more or less guarantee to our customers that goods will arrive when we tell them to arrive,” DyBuncio said, noting that they are able to get priority berthing.

He also added that even 2Go’s project logistics business (or ones that cater to delivering big equipment, solar panels), cold chain, and its express deliveries, thanks to the growing e-commerce space, are also promising.

The company being bullish on its logistics business is reflective of its push to expand to provincial areas.

“For the provincial areas to continue to grow at a higher clip than what we’re experiencing here in Metro Manila, you need logistics to deliver the goods and services which the local communities in those provinces require,” said DyBuncio.

The company already had a start in 2024, with 85% of its expanded footprint dedicated to the provinces. – Rappler.com