Meralco inks O&M contract with Irish state-owned firm

By Lenie Lectura - January 30, 2018

https://businessmirror.com.ph/meralco-inks-om-contract-with-irish-state-owned-firm/

THE Manila Electric Co. (Meralco) has inked an operation and management (O&M) agreement with the Electricity Supply Board (ESB) of Ireland for the Philippines’s first ultra-supercritical coal power plant that will be undertaken by Atimonan One Energy Inc. (A1E).

“We signed that in December last year,” Meralco President Oscar Reyes said. “I think that contract, O&M, is valid for a period of up to 10 years.”

Reyes added the ESB will operate and manage the plant “with the intent, in due course, that we can operate and maintain it on our own.”

He added this arrangement is necessary because “it is such a big investment that we want to make sure it is operated and maintained very efficiently.”

ESB is a state-owned electricity firm engaged in generation, transmission and distribution to supply.

“We want to be  able to have assurance of expertise and technology for a period, but our objective is to go on our own later,” Reyes said.

A1E is the developer of a 2×600-megawatt (MW) coal plant in Atimonan, Quezon. It is a wholly owned subsidiary of Meralco PowerGen Corp. (MGen), Meralco’s power-generation arm. AE1 is currently in the final stages of its selection and contract documentation process for an EPC (engineering, procurement, construction) contractor.

The company is tapping a number of local banks to finance the loan component of the power project, which is being eyed for completion in late 2021. Site preparation started in 2017.

Reyes earlier identified Bank of the Philippine Islands and Philippine National Bank as among the eight banks that will partly finance the power project.

However, Meralco could not yet close a financing deal with the banks while its application for a power supply agreement (PSA) remains pending with the Energy Regulatory Commission (ERC).

MGen signed in April 2016 a 20-year PSA with Meralco for the full output of the plant, and filed with the ERC for its final approval.

It has already secured the necessary permits from the Department of Environment and Natural Resources and the National Commission on Indigenous Peoples. Likewise, a certificate of land use conversion for the resettlement site was issued.

“We continue to engage with the ERC. The important thing is, every month, results in higher project cost because the EPC cost is increasing and exchange rates are moving,” Reyes said. “So, in order to ensure the viability of the project, and the lower price for consumers, it’s best if early approval can be given.”