18 July 2011

Subic Power Expands With $1B

MANILA — The entry of the Pangilinan-led Meralco in the coal-fired Subic power plant would pave the way for the expansion of the 300-megawatt coal-fired power plant into a 600-mw with investments of almost $1 billion for the entire project.

Subic Bay Metropolitan Authority administrator Armand C. Arreza told reporters at the sidelines of the Philippines-Taiwan Joint Economic Conference (JEC) Thursday that the entry of Meralco PowerGen Corp. in Redondo Peninsula Energy Inc. in Subic would dilute the shareholdings of the Aboitiz Group and Taiwan Cogeneration Corp. (TCC) to less than 50 percent.

Originally, the Aboitiz group owns 51 percent share and the Taiwanese with 49 percent. After the Meralco entry, the Filipino investors would have 75 percent shareholdings and the Taiwanese would be diluted to 25 percent, Arreza said.

According to Arreza, only one third of the first phase 300-mw power plant would be supplied to Subic and the rest for Olongapo and Clark. But with the additional 300-mw capacity, the Subic plant would be augmenting power supply to the national grid.

The power distribution giant Meralco headed by businessman Manuel V. Pangilinan had earlier announced plans to enter power generation as "part of its over-all strategy to assist in ensuring efficient, adequate and reliable electricity at cost-competitive rates."

The company plans to put up at least 1,500 MW of new generation capacities over the next five years.

Earlier, Brian S. Hsu, TCC president, said that construction of the first phase of the project was scheduled to start in 2009 and commercial operation in 2012 and the second phase of 300MW to start three years after the commercial operation of the first phase.

The first phase was to be funded through 70 percent loans and 30 percent equity contribution.

Hsu said that the entry of the additional power capacity into Subic would mean lower power cost to Subic Freeport, which has a good number of Taiwanese investors.

“We are trying to bring the cost of power down especially that lots of users in Subic are paying very high rates,” he noted.

Aside from lower cost, Hsu said the coal-fired plant is using the circulating fluidized bed (CFB) technology, an environmentally-friendly technology and is considered a ‘clean coal technology.’

Even at that time, Hsu already said that the joint venture was already considering of taking in new investors but it could be arranged after the project has come into commercial operation saying it would be easier to pursue a project with only two partners negotiating.

The Taiwanese power company supplies 25.4 percent of the total 7,721 megawatt power requirement of in Taiwan.

The Subic project is the first international foray of the Taipei Stock Exchange-listed company. (Bernie Cahiles-Magkilat, Manila Bulletin)