The Philippine Star
06/23/2006
The country’s wholesale electricity spot market (WESM) will start virtual commercial operations today, Philippine Electricity Market Corp. (PEMC) president Lasse Holopainen said, in time with the fifth-year anniversary of the passage of the Electric Power Industry Reform Act (EPIRA) of 2001.
Energy Secretary Raphael P.M. Lotilla said PEMC had actually commenced with its test live dispatch operation (LDO) last June 19 with 25 registered generators and 170 customers consisting of private utilities, rural electric cooperatives, industrial and commercial companies, and government offices.
"The new dynamic and competitive market would surely necessitate adjustment in the way we do business in order to complement and meet the requirements of various clients and stakeholders," Lotilla said. "Despite many challenges, quality of service should not be compromised but instead we should continue to provide better performance, surpassing mediocrity and recklessness in decision-making," he said.
The WESM is the second electricity spot market in the region after Singapore, and the first in a developing Asian country.
When the PEMC, the WESM’s operator and governing body, was established two and a half years ago by the Department of Energy and industry representatives, many observers expressed doubts as to whether the Philippines had the economic and technical expertise as well as the political will to implement the much needed reform measure successfully.
Holopainen, however, noted that over the last two years, the establishment of the WESM had been on-time and on-budget.
In the process of developing the market, the PEMC has also set new international benchmarks for development costs as well as market design and implementation.
The WESM, once operational, will cost generators 1.3 centavos per kilowatthour (kwh), a fraction of the charges of any other electricity market in the world. The WESM is also designed as a locational marginal pricing (LMP) market, considered the most modern and accurate of market designs. A LMP market tracks the true economic cost of electricity to 600 points of delivery in Luzon and the Visayas.
"This design allows for complete pricing transparency and unprecedented efficiency in the dispatch of generation assets, allowing policy makers, industry players and observers real-time information to make decisions," Holopainen said.
Under the WESM set-up, electricity is offered and bought on an hourly basis, with the price of electricity reflecting the true cost of power at each interval.
This set-up should allow for the appropriate response from electricity users that will not only lead to short-term efficiency gains, but also a more robust industry in the longer-term. "Other electricity markets, such as PJM in the US, have achieved generator efficiency gains of up to 35 percent," Holopainen said.
Holopainen said the WESM will have a fundamental impact on electricity reserve costs, generator costs, demand-side management as well as privatization of government assets and future greenfield power plant projects.
"The country as a whole benefits from the competitive pressure and market discipline the WESM brings to the industry," he added.
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The Philippine Star
06/23/2006
The Energy Regulatory Commission (ERC) is likely to approve a lower rate for the recovery of the National Power Corp.’s latest incremental currency exchange rate adjustment (ICERA) and generation rate adjustment mechanism (GRAM) applications, an ERC official said.
"It’s hard to predict what the ERC’s decision will be, but normally we approve the petitions but the approved rates are always lower than what Napocor files. We can say that the approved rates will be lower that what they filed," a ranking ERC official said in an interview.
The ERC official said the commission would release the decision on the two Napocor rate increase applications by the middle of next month. "We will have until mid-July to decide on Napocor’s petitions. The mid-July deadline is already the end of the 45-day extension we implemented."
In separate decisions released early this month, the ERC, instead of granting automatic implementation, extended for another 45 days the resolution of Napocor’s GRAM and ICERA applications for the period covering April 26 to Oct. 25, 2005.
Under its GRAM application, Napocor pushed for the approval of its deferred accounting adjustment charges of P0.4175 per kilowatthour (kwh) for the Luzon grid, P0.3597 per kwh in Visayas and P0.5217 per kwh for Mindanao over the seven-month period. These price adjustments are recoverable in 12, six and 18 months, respectively.
At the same time, Napocor, under its application for ICERA, urged the ERC to approve its adjustments for debt service and operational expenses of P0.1410 per kwh in Luzon, P0.1997 per kwh in Visayas and P0.0373 per kwh in Mindanao and for actual payments of capacity and infrastructure fees of P0.4486 per kwh in Luzon, P0.0205 per kwh in Visayas recoverable in 24 months.
Napocor filed the petitions on April 18, 2006 and could have automatically implemented them on June 2 this year had not the ERC invoked the GRAM and ICERA implementing rules.
The additional generation cost and currency exchange rate would have been reflected by all concerned distribution utilities since under the law, generation cost is a direct pass-through to consumers.
In separate rulings, however, the ERC argued that the 45-day resolution deadline set by the implementing rules should not apply since the same rules provide only for a three-month recovery period.
But Napocor had filed for a seven-month recovery, which the ERC said would need more time to resolve. Thus, ERC extended the deadline of June 2, 2006.
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The Philippine Star
06/21/2006
The winning bidder for the 25-year concession of the National Transmission Corp. (TransCo) will be required to obtain a congressional franchise to operate the transmission company, which is considered a public utility, the Power Sector Assets and Liabilities Management Corp. (PSALM) said yesterday.
PSALM president Nieves Osorio said securing a franchise will be one of the prior conditions to complete the TransCo lease-contract transaction.
The asset management firm is already preparing all the necessary procedures and requirements as it is set to bid out the TransCo concession in September this year.
This as the Energy Regulatory Commission (ERC) released yesterday the decision on the final determination on the so-called smoothed maximum allowable revenue (SMAR) for five years, or for the period 2006-2010.
The approved SMAR, however, was far lower than what TransCo has applied at least for the next four years.
On the first year or in 2006, ERC approved P35.611 billion as against TransCo’s application of P34.9 billion, an increase of P642 million.
But in the succeeding years, or from 2007 to 2010, ERC approved a much lower SMAR for TransCo. The final determination on MAR, however, is better than the draft determination earlier approved by ERC which was set at a flat revenue of P27 billion for the five-year period.
For the five-year period, the difference of the MAR approved by the ERC as against the MAR applied by TransCo is P120.74 billion.
TransCo manager for strategic planning Ed Orencia said they would present the ERC decision to management next week.
"We will decide what to do with the decision, whether to file a motion for reconsideration or accept the decision next week," he said.
The SMAR is one of the areas being looked at by interested investors in bidding for the TransCo lease contract. So far, three prospective investors from Canada, Australia and Thailand that have expressed keen interest in participating in the bidding for TransCo’s concession.
On the franchise, Osorio said under the concession agreement between TransCo and the concessionaire, the transmission company will retain the legal title to all the transmission assets, sell sub-transmission assets to distribution utilities, and take over the business if the concessionaire defaults.
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The Philippine Star
06/21/2006
Malaysian power utility firm Ranhill Bhd plans to cough up more than $230 million to take control of the Masinloc power plant in Zambales.
In a Reuters report from Kuala Lumpur yesterday, Ranhill said that it had bought out its partners in the YNN Pacific Consortium Inc., which successfully bid $561.7 million in December 2004 for the 600-megawatt coal-fired plant.
Ranhill said it had paid only $8 million to buy out YNN, but the move now leaves Ranhill responsible for making the initial $227 million payment to the Philippine government for the Masinloc plant.
The $227-million payment must be made by June 30, Ranhill said, adding that it would also need to contribute $3 million in working capital into YNN, which will run the plant.
YNN must settle the remainder of its $561.7 million bid for the Masinloc plant over the next seven years, through 14 equal semi-annual payments, at an interest rate of 12 percent.
"Ranhill may be required to advance additional funds to YNN in the future, the quantum of which can only be determined later," the company said.
It would fund the $8 million acquisition price, the $227 million initial payment and the $3 million in YNN working capital from internal funds or borrowings, the firm added.
The government had planned to sell some 31 power plants by the end of last year, but political instability and investor doubts about profitability in the sector meant it failed to sell any in 2005.
The plants, with rated capacity of 4,335 megawatts, account for about one-third of total Philippine generating capacity. Just six of them have been sold, or 11 percent of the targeted generating capacity for sale.
National Power Corp., is banking on raising $4 to $5 billion from the sale of its plants and by leasing its electricity grid to cut its debts, which are equivalent to about a third of the country’s annual gross domestic product.
YNN spokesperson Gary Makasiar said the consortium is currenty conducting a roadshow to raise fund for the downpayment.
"We are talking with European and American banks for financing. Ranhill is now the majority owner of the consortium. We do not want to lose the $14 million bond so we are trying as much as we can to come up with the downpayment," Makasiar said.
In end-December 2005, PSALM had asked YNN to deliver by mid-January 2006 the $11.14 million performance bond which would be effective until August 2006.
YNN complied with the requirement in January. With the entry of the Malaysian firm and a new payment deadline set, the consortium was given a higher performance bond of $14 million.
The performance bond serves as a guarantee that the consortium would not renege on its obligation to pay the upfront payment of $227 million on or before the June 30 deadline (from the original March 31) and later on settle the balance of $334.7 million to complete its winning bid of $561.7 million for the Masinloc facility.
"We believe that the additional $3 million performance bond is enough indication of YNN-Ranhill’s seriousness to push through with the deal. It is also sufficient protection for government’s interests in the next three months," PSALM president Nieves Osorio said earlier.
According to Osorio, the government has decided to extend the delivery of the upfront payment following a meeting with YNN officials and Ranhil president and chief executive officer Tan Sri Hamdan Mohamad.
Osorio said they expect Ranhill and YNN to complete within the three-month extension all financial arrangements relating to Ranhill’s investments in YNN.
Ranhill has tapped ABN-AMRO for its fund raising requirement. It is also talking with the Private Sector Operations Department of the Asian Development Bank (ADB) for project refinancing and possible equity investment.
Osorio said International Finance Corp., the investment arm of the World Bank, has also expressed keen interest to extend financial assistance to Ranhill in case it wants to extend the capacity of Masinloc in the future.
The proposed acquisition of YNN Pacific by Ranhill is in tandem with the Malaysian firm’s corporate vision of increasing Masinloc’s generation capacity to 1,000 MW by 2009.
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The Philippine Star
06/20/2006
The country’s economic managers are looking into the possibility of extending the implementation of the one percent tariff cut on petroleum imports up to next month, a ranking energy official said.
Department of Energy (DOE) director Zenaida Monsada said the impact of the tariff reduction on imported fuels would be felt up to the end of this month only.
"The economic managers (led by Department of Finance and DOE) are reviewing the trigger levels for the tariff reduction. We are now checking if there is still a possibility of lowering the rates, and yet remain revenue neutral (for the government) – the triggers that we have are based on what the DOF wants. We are still haggling if it can be lowered and yet still be revenue neutral," Monsada said.
Every one percent cut on tariff on imported fuel products results to about P2.5 billion in estimated foregone revenues for the government monthly. The revenue impact would also depend on the volume of oil that the oil firms will import.
Monsada said the tariff reduction is among the mitigating measures being implemented by the government to cushion the impact of rising crude prices on the consuming public, as the tariff cut is one thing directly affecting public transport.
"It’s actually the economic managers that proposed the review, as they want to mitigate the high and increasing oil prices, but the tariff rate is just one of the schemes – which are focused on the public transport, apart from the "Tindahan Natin," school feeding program, among others," she said.
President Arroyo announced last week that the price of diesel will not increase this month because of the lowering of the tariff on petroleum products by one percent.
But Monsada noted that with the rate the price of crude is moving in the international market at the moment, there is a possibility that the one percent tariff cut would be lifted anytime soon based on the trigger level set by the DOF.
"We are now looking if we can lower the trigger to maintain the one percent discount. It is possible that diesel could be lifted if we would consider the average in the first half of June," she said.
She said the review of the trigger points should be completed within the month so as not to remove the discount being enjoyed by the public transport groups.
According to the DOE official, if changes would be approved on trigger levels, it would be reflected in the guidelines. "We may have to revise the guidelines to accommodate any change, if there would be any," she said.
Dubai crude averaged at $65.38 per barrel as of June 15, while the average price of MOPS-based unleaded gasoline stood at $84.06 per barrel. The average price of MOPS-based diesel as of June 15 was at $88.47 per barrel.
Consistent with the Executive Order 527 signed by President Arroyo last month, trigger prices were set as part of the guidelines for the implementation of the new EO.
Based on the guidelines, one percent tariff rates shall be imposed on crude and petroleum products should the average price of both Dubai crude and Mean of Platts Singapore (MOPS) – based diesel in the last two weeks reach $75 per barrel and $88 per barrel, respectively.
On the other hand, the two percent tariff rates shall be imposed on crude and petroleum products should the average price of both Dubai crude and MOPS – based diesel in the last two weeks reach $66 per barrel and $88 per barrel, respectively.
Zero tariff rates, meanwhile, shall be levied on crude and petroleum products should the average price for both Dubai crude and MOPS – based diesel in the last two weeks reached $85 per barrel and $88 barrel, respectively.
The tariff adjustments will only be implemented upon certification issued by DOE to the DOF and the Bureau of Customs that the trigger prices for both crude and diesel have been met.
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The Philippine Star
06/20/2006
Three of the country’s major independent oil players-Eastern Petroleum Corp., Flying V and Seaoil Philippines – formed yesterday a joint venture to intensify efforts to promote and cross-market their alternative fuel products.
In a press conference, Eastern Petroleum Corp. (EPC) chairman Fernando Martinez, who is also the chairman of the Independent Philippine Petroleum Companies Association (IPPCA), said the initiative – dubbed as "Sugod-Karga na, mga Kapatid" – is aimed at integrating and broadening the choice of new, cleaner energy to the motorists now reeling from successive oil price increases.
"The uniting of the three oil players pools almost 300 stations nationwide as outlets for the three alternative fuel products, thus broadening each other’s offerings while making them available to more motorists throughout the country," Martinez said.
EPC is pushing for the use of autogas or liquefied propane gas (LPG) for the transport sector particularly in taxi fleets.
Flying V, on the other hand, is more into the promotion of coco-methyl ester blend on diesel while Seaoil is strongly supporting the use of ethanol as gasoline additive blend.
Martinez said EPC is planning to put up 20 auto LPG gas refilling stations this year.
By next month, he said they would be putting up National Conversion Center in Pasig that could convert an average of 100 vehicles per day into gas-powered vehicles. LPG for transport, he said, has been widely accepted in Europe, South Korea and Japan for being economical, cost-efficient and environment-friendly fuels.
According to Martinez, EPC is now in the process of tapping funding institutions like the Development Bank of the Philippines (DBP) to finance this project.
Seaoil president Glenn Yu said ethanol-blended gasoline, on the other hand, has been developed from sugarcane and is seen to reduce toxic gas emission by 22 percent.
Flying V chairman and CEO Ramon Villavicencio said at five percent coco-biodiesel blend, the Philippine economy stands to register savings or value-added to country’s resources by P3.1 billion through export substitution which can be used either to lower price of diesel or to boost the agricultural sector.
The three small independent players also urged the lawmakers to pass the Biofuels Act. "This is a major step toward achieving independence from 100-percent imported fossil fuels," he said.
The officials from the three independent oil firms also urged the country’s Big Three oil companies – Petron Corp., Pilipinas Shell and Chevron Philippines – to help lead the way in promoting quality fuel products including alternative fuels like ethanol and coco-biodiesel products.
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The Philippine Star
06/19/2006
A tripartite committee composed by the Department of Energy (DOE), the Philippine Electricity Market Corp. (PEMC) and the Energy Regulatory Commission (ERC) has proposed a price ceiling or a bid cap of P62,000 per kilowatthour (kWh) to apply during the commercial operation of the country’s wholesale electricity spot market (WESM).
The ERC is currently asking concerned parties to comment on the price cap.
According to the ERC, industry’s comments on the initial bid cap should be submitted on or before June 19 this year.
The ERC said that cap was proposed by a committee which was created for the study and adoption of certain market mitigating measures to be implemented in the WESM.
All interested parties are invited to submit their comments to the initial bid cap on or before June 19, 2006.
Aside from setting the ceiling, one of the committee’s goals is the adoption of initial bid caps or a ceiling for price offers at the WESM in order to limit or reduce possible instances of excessive increases in market prices.
This is an additional mitigating measure and will be put in place before WESM commences its Luzon commercial operations in end June 2006.
"This tripartite committee will address market price contingencies that may arise during the initial operations of the WESM when institutional mechanisms to address these contingencies are still untested.These contingencies, though remote, may include excessive increases in market prices. The committee is therefore expected to apply pre-emptive measures as needed during the early stages of WESM," Energy Secretary Raphael P.M. Lotilla said.
Lotilla also stressed that the formation of the tripartite committee was initiated to safeguard consumers against any extreme price volatility which could occur during the first few months of WESM operations.
"While we do not expect extreme pricing volatility in the first year of market operations, it is prudent to be cautious," said PEMC president Lasse Aznar Holopainen. "These additional measures are intended to address the eventuality of fuel price spikes on system problems that may occur. These are really an added safety feature over and above those already built into the system and the WESM rules, which govern the day to day trading behavior of the participants and prevent collusion, withholding of energy and other forms of anti-competitive behavior."
Under the resolution which created the committee, the DOE, ERC and PEMC will jointly monitor price volatilities, identify price-related contingencies and recommend measures to mitigate extreme price conditions if these do occur during WESM’s first year of operations.
"The electric power industry stakeholders can rest assure that the ERC will always do its best to support healthy competition in the spot market in order to promote customer choice of their electricity provider and to encourage active participation by local and foreign investors," according to ERC Chairman Rodolfo B. Albano Jr.
The committee, composed of the DOE secretary, ERC chairman and the PEMC president, is also tasked to implement regular and efficient information sharing system as well as a direct feedback mechanism to effectively address contingencies if they arise.
The tripartite committee is separate from the WESM Market Surveillance Committee (MSC), which also monitors the market for any unfair competition.
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The Philippine Star
06/19/2006
PTT Philippines Corp. (PTTPC), formerly Subic Bay Distribution Inc. (SBDI), will pour in some P3.5 billion to P4 billion worth of investments in the Philippines starting this year up to 2009, a ranking company official said.
During the launching of PTTPC as the new corporate name of SBDI over the weekend, PTT Public Co. Ltd. of Thailand executive vice president for commercial and international marketing oil business group Artasith Pothiapinyanvisuth said they are planning to transfer one of their existing lubricant blending plants in Thailand to the Philippines.
PTT also changed the name of Subic Bay Fuels Co. (SBFCI) to PTT Philippines Trading Corp. (PTTTC) and will be tasked to source products from Thailand, Singapore, Korea and Japan. It will also sell products to companies located in the Subic Bay Freeport one, Clark Special Economic Zone and other economic zones in the country.
The PTT official said they have yet to identify an area in Metro Manila where to locate the lubricant plant. But he said they would spend about P1 billion for this project.
He said they are also planning to put up a liquefied petroleum gas (LPG) plant with a capacity of 5,000 metric tons (MT) to 10,000 MT.
The LPG storage plant is seen to go on commercial operation by 2008 or 2009 in time for the LPG production in Thailand.
"We see an opportunity for us to sell LPG to the Philippines which imports its LPG needs," he said.
The PTT executive said they expect the construction of a five-million liter depot in Cebu to be completed by October and to start commercial operation by November this year. This oil terminal will allow PTT to cater to the petroleum market in the region.
He said part of the five-year plan is the putting up of an ethanol plant as part of its contribution to the promotion of the use of alternative fuels in the transport.
PPTPC president Siripong Phoungpaka said they would be spending about P500 million this year. A portion of this budget will go to the construction of 50 new retail gas stations all over the country. To date, PPTPC has 16 gas refilling stations. In the next five to 10 years, they expect to put up 100 to 200 stations nationwide.
Phoungpaka said they also want to introduce the new style of service station similar to what they have in Thailand which they call "one-stop-shop" stations. These stations have unique features like banking facilities aside from the usual locators.
He said they are also looking at the possibility of putting up service stations in the South, North Luzon and Subic/Poro point expressways.
But he said they have yet to resolve the issue of leasing a land. "We are willing to invest but the problem is how to get the land," he said.
PTTPC’s storage facilities are located in Subic Bay and Clark Field with combined capacity of three million barrels.
Phoungpaka said the expansion program in the Philippines is part of the overall strategy of PTT Group to go global. PTT has extensive experience in petroleum, petrochemical and exploration with market value of more than $24 billion as of end-2005.
"PTT policy now is to go global and we have to expand in Southeast Asia including the Philippines," he said.
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The Philippine Star
06/19/2006
The government is expected to collect $250 million in royalties from the $4.5-billion Malampaya deep water gas-to-power project.
PNOC president Eduardo Mañalac said this is $50 million higher than the $200 million collected last year.
Mañalac said the Malampaya consortium composed of Shell Petroleum Exploration B.V. (45 percent) , Chevron Texaco (45 percent) and PNOC-Exploration Corp. (10 percent) is expected to fully recover its cost, thus making the share of the government higher.
"The proceeds for the government and contractor would be bigger, as the 70 percent for cost recovery would no longer be taken from the proceeds," he said.
The PNOC official said they hope to achieve full-cost recovery very soon. "Expected cost recovery is some time this year, maybe before the second half. By cost recovery — that means the biggest bulk used for the development would be recovered, but of course there would be operating expense year after year, which would be cost recovered, but no longer substantial," he said.
But he said while the government’s royalties in the project would increase, PNOC’s share, on the other hand, is seen to decline.
"That’s another reason why our (PNOC-EC) revenues from the Malampaya would go down, as the 70 percent would no longer be incorporated.
The low-end of the targeted total royalties to be accrued by the National Government from the Malampaya project is $9 billion while the high-end could reach up to $13 billion over a period of 20 years.
The cost recovery program agreed by the project proponent and the government allows the SPEX-led consortium to recover 70 percent of the cost incurred in the project.
After the project proponents recoup their costs, the government and the consortium will divide the remaining 30-percent revenues generated from the project. Sixty percent of the 30 percent will go to the consortium while the remaining 40 percent to the National Government.
Once fully recovered, the formula would shift. The whole 60 percent goes to the government and 40 percent would go to the consortium.
The royalties to be paid by the consortium developing the Malampaya project is benchmarked on the prices of international crude.
The earnings from the $4.5-billion Malampaya project, known to be the biggest single investment in the country so far, could also help the National Government narrow down its budget deficit.
Production from the Malampaya gas field provides fuel for the 2,700- megawatt (MW) combined-cycle gas turbine (CCGT) power plant in Southern Luzon starting 2002.
These are the 1,200-MW Ilijan being managed by the Korea Power Corp. and the National Power Corp. (Napocor); 1,000 MW-Sta.Rita and 500-MW San Lorenzo combined-cycle gas turbine plants in Batangas, being run by the First Gas Power Corp. of the Lopez group.
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The Philippine Star
06/19/2006
The Power Sector Assets and Liabilities Management Corp. (PSALM) has sought the approval of the monetary authorities to issue $700 million worth of bonds to finance the funding requirement of the National Power Corp. (Napocor).
"We do have something programmed. We applied for $700 million, it would depend on the Department of Finance (DOF) if they would issue it all to us. The debt servicing requirement is close to what we’re borrowing. We’re applying the necessary approvals," PSALM president Nieves Osorio said.
Osorio said they do not know yet if they would have a one-time issue for the $700 million.
The PSALM official said they have been receiving positive feedbacks from investors. "We have been receiving calls from investors. They are very interested," she said.
While Napocor has managed to survive for the past five months without borrowing, PSALM would need to raise funds for an expected bullet payment of the state-run power generation’s loan amounting to $500 million scheduled this August.
Last year, the National Government, through the PSALM, borrowed at least $750 million for the financing requirement of Napocor.
Industry sources said that as of end-December 2005, Napocor posted a net income of about P5 billion based on unaudited financial report submitted to the Commission on Audit (COA).
Napocor president Cyril del Callar, meanwhile, said they expect to maintain a positive earnings performance this year.
"We are maintaining our prudent management in operating our plants. If we sustain this in 2006, then we will remain in the black," he said.
PSALM, created by Republic Act 9136 or Electric Power Industry Reform Act (EPIRA) of 2001, is tasked to handle the finances and privatization of Napocor.
The last time that Napocor recorded a net income was in 1997 posting earnings of P3.05 billion.
Napocor closed the year 2004 with a net loss of P29.9 billion, still a significant improvement over the 2003 figure of P117.02 billion.
The financial turnaround was attributed to improved fuel mix and the tariff adjustments given by the energy regulator. "They were able to get better prices for their fuels; and (has gotten) a rate adjustment — which is like after 10 years," Osorio said.
Napocor has implemented a number of stringent cost-cutting measures such as economic dispatch of its power plants which enabled the power firm to utilize cheaper fuel types like hydro, geothermal and natural gas, and a reduced utilization of oil and coal which are more expensive.
In 2005, Napocor’s interest expenses are projected to decline from P30.25 billion in 2004 to P22.64 billion in 2005 as a result of the National Government’s decision in 2004 to absorb some P200 billion of Napocor’s outstanding liabilities as mandated under the EPIRA.
Napocor had been able to fully implement an average 32.6-centavo per kilowatthour (kWh) rate adjustment.
The appreciation of the peso and sustained strong energy sales have also been able to contribute to the financial turnaround of the power company.
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The Philippine Star
06/19/2006
US-based CalEnergy International Ltd. has expressed interest in putting up in Mindanao a 225-megawatt (MW) hydroelectric power facility that will require an investment of up to $300 million (approximately P15.9 billion), a ranking company official said.
"We’re looking at Agus 3. We expect the electric cooperatives or distribution utilities to be our off-takers in northern and possibly elsewhere. Off-takers would not be a problem in Mindanao," CalEnergy business development executive Raymond Cunningham told reporters over the weekend.
Cunningham said they expect to invest about $300 million to finance this proposed project.
"Where the Philippines needs power we would be looking to see if we could find something to develop," he said.
At present, Napocor operates the Agus complex. But the existing complex does not include Agus 3. The complex includes: Agus 1 (2 x 40 MW) in Marawi City in Lanao del Sur, Agus 2 (3x60 MW) in Saguiaran, Lanao del Sur, Agus 4 (3 x 52.7 MW) in Baloi, Lanao del Norte, Agus 5 (2 x 27.5 MW) in Ditucalan, Iligan City, and Agus 6 (2 x 25 MW and 3 x 50 MW) in Fuentes, Iligan City.
Aside from Agus 3, Cunningham said they are also looking at putting up a small hydro power project in Luzon.
"One project we are pursuing is the Balintingan, which is a major dam in southern Nueva Ecija. It was studied in the early 80s, and we have a joint memorandum of understanding with MWSS and NIA to see if we can make that project go," he said.
He said they expect to complete the study within the year. "It would have a small power not big probably 40 to 50 megawatts," he said.
Cunningham said they are also interested to bid for the geothermal power plants of Napocor but they would want to focus more on hydro projects where they have expertise.
"Yes, we’re interested in Tiwi-Makban, but that’s a bit complicated. We’re waiting for them (PSALM) to release all the bids," he said.
CalEnergy also operates the 130-megawatt Upper Mahiao geothermal power plant, the 240-megawatt Malitbog geo-thermal power plant, and the 155-megawatt Mahanagdong geothermal power plant.
Last week, CalEnergy signed an agreement with the government for the turnover of the Upper Mahiao geothermal power plant on June 25 this year.
CalEnergy is one of the leading international power firms in the development and production of energy from diversified fuel sources including geothermal, natural gas and hydroelectric.
Based in California, CalEnergy was founded in 1971 to provide consulting and development services for geothermal power production facilities in North America.
In the late 1970s, when the company recognized the many opportunities presented by emerging industry deregulation in the US, CalEnergy began the transition from a service provider to an independent power producer.
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