25 July 2011

Meralco acquires 52% share of Subic coal plant

Manila Electric Co. (Meralco), the country’s largest distributor of electrical power, marked its reentry into the power-generation industry on Friday by acquiring a controlling interest in the $1.28-billion coal-fired thermal power-plant project slated for construction at Subic’s Redondo Peninsula.

The power firm, which previously sold to the National Power Corp. all the power plants it had built since it was organized in 1903, successfully forged a deal with AboitizPower and Taiwan Cogeneration Corp. (TCC), the original partners in the Redondo Peninsula Energy Inc. (RP Energy), which has the development rights to develop the 600-megawatt coal-fired power plant.

Under a shareholders’ agreement signed on Friday by the three parties, Meralco’s subsidiary Meralco PowerGen Corp. (MPGC) became the controlling shareholder of RP Energy with 50 percent plus two shares, while AboitizPower subsidiary Therma Power Inc. (TPI) and TCC subsidiary Taiwan Cogeneration International Corp. Philippines (TCIC) held an equal proportion of the remaining shares.

The agreement was signed by MPGC president Oscar Reyes, MPGC executive vice president and general manager Aaron Domingo, TPI president Antonio Moraza, TCIC director Brian Hsu, and RP Energy president Erramon Aboitiz.

Energy Secretary Jose Rene Almendras witnessed the signing at the Lighthouse Marina Resort here.

Meralco’s reentry into power generation, Reyes pointed out, came almost 40 years after Meralco relinquished its power-generation operations and 20 years after power generation was reopened to the private sector amid the crippling power crisis in the late 1980s.

But with the Aboitiz Group and Taiwan Cogeneration Co., Meralco is “making a strong statement and vote of confidence in our country and in our economy and a strong commitment to growth and progress,” Reyes said.

He added that Meralco is “well-positioned” and aims “to be part of an integrated solution” in meeting the crucial need for new technologically-advanced and cost-efficient generation capacity.

Reyes also extolled Subic both as a “major investment destination and a strategic site for business” and an important player in the energy industry by hosting the strategic 5-million barrel Subic-Clark liquid fuel-storage depot.

“With RP Energy’s 2x300 megawatt power facility, the [Subic Bay Freeport] Zone will again play a strategic role in helping meet 8 percent of the entire Luzon grid’s power needs,” he said.

The Meralco official stated that the Subic power project would need the continuing full support and goodwill of the Department of Energy, the national and the local governments, the Subic Bay Metropolitan Authority as well as local communities.

Erramon Aboitiz, meanwhile, reaffirmed RP energy’s commitment in providing competitively-priced power without damaging the environment.

He stressed that the proponents have specified the use of circulating fluidized bed boilers in the power plant. This kind of boiler removes sulfur oxide and controls the burning temperature of the coal to prevent the formation of nitrous oxides, lower air emissions, and make the plant environment-friendly, he said.

Aboitiz also cited the advantages of taking in MPGC as a partner.

“Being the country’s largest utility serving the equivalent of more than half the nation’s GDP [gross domestic product], Meralco is without a doubt the ideal conduit to deliver the cost advantage of RP Energy to as many households and businesses as possible,” he said.

The Subic coal-fired thermal power project is projected to be completed with a total budget of $1.28 billion. It will consist of two 300-megawatt units that will be constructed in two phases.

The first unit is expected to be commercially operational by the first quarter of 2015, while the second unit is expected to be completed by the second quarter of the same year. (Henry Empeño w/ Paul Anthony Isla, Business Mirror)