Lafarge Secures Power Supply Contract From Masinloc

Manila Bulletin

By MYRNA M. VELASCO

July 6, 2012, 4:23pm

MANILA, Philippines – The 600-megawatt Masinloc coal-fired facility will be one of the power supply sources to sustain the operations of cement firm Lafarge Republic Inc. or formerly Republic Cement Corporation.

This, as the publicly-listed cement company announced its decision to ink a power supply deal with Masinloc Power Partners Co. Ltd. the operating subsidiary of American firm AES Corporation.

It noted in a disclosure to the Philippine Stock Exchange (PSE) that “Masinloc will supply electricity (to Lafarge) for a period of 5 years commencing on December 26, 2012 under agreed terms and conditions.”

The price and volume of the power supply pact were not provided, but like in all other electricity supply agreements, the deal will also have to go through regulatory approvals prior to enforcement.

With the country’s electricity supply perpetually threatened with shortages, many power-intensive industries such as those in cement manufacturing, are already opting to contract for their own power supply.

The much awaited introduction-to-market of open access policy is seen to widen the choices for end-users, especially in sourcing their own supply as well as in patronizing innovative services that may become a trend when full competition finally takes its debut in the restructured electricity sector.

Masinloc Power Partners, for its part, has already entered into several power supply contracts for the output of its coal plant in Zambales. One of its major off-taker (purchaser) is Manila Electric Company (Meralco) for a contract that will be enforced over seven years.

The Masinloc supply will plug part of the volume that will be displaced for Meralco following the lapse of its transition supply contract (TSC) with the Power Sector Assets and Liabilities Management Corporation around December this year.

Given opportunities for expansion, AES has also been actively navigating growth areas not only in Luzon but also in “tight supply areas” such as Mindanao grid.

For its Masinloc plant, AES has reportedly secured its environmental compliance certificate (ECC), but a final decision has yet to be laid down by its principals on the project’s implementation.

The plan would be to expand the Masinloc facility’s capacity by additional 600 megawatts and this may command an investment of $800 million to $1.0 billion.   source