Monday, July 20, 2009

DMCI wanted to solely operate the 600MW Calaca plant

MANILA, July 20 (PNA) — Consunji-owned DMCI Holdings has no plans to look for a partner in operating the 600 megawatt (MW) Calaca coal- fired power plant.
Isidro Consunji, DMCI president said that while they wanted to team-up with other firm, he explained that they are concern on any possible “internal arguments” in the future.
“We want to [get a partner]. But the problem is, if we entertain a new partner today then we might be having internal arguments on how to go forward, as our price is based on a certain strategy (i.e. we don’t intend to run it at 600-MW want to down it for the meantime to be able to rehabilitate what needs to be fixed). We also don’t want to run the plant at the maximum capacity as the plant is already and the wear might be accelerated. And if we get a new partner then we might have problems. Before entertain a partner, perhaps we need to assess where our directions,” Consunji said.
He added the main purpose of the acquiring the Calaca plant was primarily to complement the continued operations of the Semirara Mining Corp., which supplies the coal requirement of Calaca plant.
“Our strategy was defensive, why we had to bid. Prior to last year, we already expanded the Semirara’s capacity. Now we’re geared to 4 to 5 million tons a year. And Calaca represents 1.6 million tons of market. So if another wins then where do the 1.6 million tons go, and thus we will be forced to export,” he said.
He added “export price is lower than local price and will make our profitability suffer.”
During Semirara’s initial operation, Consunji said “99 percent of Semirara’s coal goes to Calaca and now we were able to bring it down to 20 percent.”
Likewise, Consunji said they are also not keen on utilizing the entire 600-MW capacity of Calaca which has a dependable capacity of 470MW even after rehabilitating and upgrading it.
According to Mr. Consunji, they are now in talks with various financial institution in particular the Banco de Oro to fund the US$ 361.7 million acquisition.
“BDO is one of the banks talking with us. We plan that it will be shared by Semirara and DMCI, but bulk of the equity would be Semirara since they are the biggest beneficiary,” he said.
DMCIHI has 56 percent stake in Semirara, which has exclusive rights to explore, mine and develop the coal resources on Semirara Island in Caluya, Antique.
DMCI’s offer defeated Thailand-based firm Banpu Power Limited.
Established in 1995, DMCIHI is engaged in construction business, construction component companies, and related interests of the Consunji family. Its core businesses include construction, real estate and coal mining.
Consunji said they expect the Power Sector and Assets Liabilities Management Corp. (PSALM) to issue the notice of award this week and in the next 270 days, the company will pay the 40 percent upfront payment.
National Power Corp. has attached around 287-MW supply contract to Calaca or an equivalent of 48 percent of the plant’s rated capacity.
Meanwhile, Consunji said once they have completed the acquisition of Calaca, they will enter the wholesale electricity spot market (WESM).
“We will participate in the WESM. And with the privatization of Calaca,” he said.
Last week, PSALM declared DMCIHI as the highest bidder for the Calaca plant and once the verification process is completed, they will be declared as the winning bidder. (PNA)