Semirara may go solo on power project

SUNDAY, 05 JUNE 2011 17:34 MIGUEL R. CAMUS / REPORTER

SEMIRARA Mining Corp., the listed mining and power subsidiary of Consunji-led DMCI Holdings Inc., may no longer tie up with another group to build the initial phase of a planned 600-megawatt (MW) coal power plant in Calaca, Batangas province.  

Isidro Consunji, Semirara vice chairman and DMCI president, said the company wants to “jumpstart” the development of the power plant, noting that talks with potential partners that have included Manila Electric Co. (Meralco) and Japanese trading giant Marubeni Corp. are moving slower than expected.

The development also comes as Meralco, an electricity retailer diversifying into power generation, announced last week that it plans build a $1.2-billion coal-fired power plant north of Metro Manila with a maximum capacity of 600 MW.

“We will most probably do it ourselves first, then sell down later. Maybe to a strategic partner,” Consunji told the BusinessMirror in a chance interview last week, referring to Semirara’s power expansion plans.

“If we have to wait for the decision of the partner, it might take longer,” he said.

Semirara announced in 2010 its plan to build a new coal-fired power facility also in Calaca that is seen to double its maximum power generation capacity to 1,200 MW.

Semirara will start with the first phase of the project, which will consist of 300 MW to be completed in 24 months, Consunji said.

He added that company still needs to secure project financing and may tap BDO Capital Investment Corp. to help structure a deal. BDO Capital arranged Semirara’s rights offering last year that helped it acquire from DMCI its first power plant.  

Consunji estimated the development cost at $1.5 million per MW, suggesting that the entire project will cost around $900 million.

“Half of [phase 1] will be equity and 50-percent debt,” Consunji said, without providing additional details, pointing out that talks are not yet final.

Joseph Roxas, president of stock brokerage firm Eagle Equities Inc., said there is little pressure for the Consunji group to look for a partner for this venture given its experience in this sector and the high demand for power in the country.

The Philippines would need 16,500 MW in new capacity through 2030 with only a quarter of that amount being committedit was reported earlier.  

“They could partner with a power distributor like Meraclo if there is no outlet for the electricity. But since there is an ongoing shortage, there is no need,” Roxas said in a phone interview over the weekend. “It’s a seller’s market now.”

Consunji said earlier that Semirara expects profits to rise up to 40 percent this year to P5.6 billion due to higher coal prices and improved power output from the ongoing rehabilitation of its power plant.

Revenues are forecast to increase by a third to P30 billion, with the coal business expected to contribute close to 70 percent and the remainder from power.

Semirara shares declined 1.4 percent to P210.60 each on Friday’s close.