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18 December 2008

Construction of $1.1-B Power plant to start

Aboitiz Power Corp. and Taiwan Cogeneration Corp. (TCC) will start construction of their $1.1-billion power plant in Subic, Zambales, by the middle of next year as the proponents believe the global crisis has actually made the project more viable.

Brian Hsu, president of TCC, said the economic slowdown has started to pull down both the financing rates and the cost of raw materials like coal, thus creating more opportunities for projects like this if the proponents could raise the capital.

"The costs are now going down, whereas a few years ago they were so high. So we are thinking of starting construction by the second half of next year," Hsu told Manila-based reporters in TCC€'s office here.

Aboitiz and TCC are now working on the contract for a 50-50 partnership for the RP Energy Redondo Peninsula Energy Inc. project in Subic.

Hsu said commercial operation is expected to start by 2012. The plant's output will be sold to the Wholesale Electricity Spot Market.

The first phase of the project involves the investment of $550 million in the construction of a plant with a rated capacity of 300 megawatts. The second phase will also entail the same amount of investments and power output.

Hsu said the partners are now working on the government licenses required, as well as the financing agreements with Philippine and Taiwanese banks.

He said the target is to secure $200 million in loans from Philippine banks and another $200 million from the financial institutions in Taiwan. The rest of the capital requirements will come from the coffers of the two proponents.

Hsu said more investors may be admitted in the future, probably after the start of the commercial operation, and there are already several companies that have expressed interest to come in.

"Right now we are going into the construction stage, and it would be easier if there are only two companies involved,"he said.

Hsu said the circulating fluidized bed technology they will use for the power plant would make the generation cost cheaper because they can use low-grade coal and even waste materials as fuel.

Another opportunity that Aboitiz and TCC are looking at, he said, is to develop a pool of talents that will undertake similar projects in other countries using the expertise that they will gain in the Subic Bay venture.

"We know that there are lots of Filipino engineers that are good, and their rates are very competitive," he said. (Max de Leon, Business Mirror)

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