STEAG to expand capacity of Philippine coal fuelled power station

30 June 2010 – The Philippines’ STEAG State Power Incorporated plans to increase the capacity of its coal fired power plant in Mindanao, reports The Manila Times. The capacity of the 232 MW facility, located in Villanueva, Misamis Oriental, will be expanded by another 150 MW in an effort to help reverse the region’s power supply deficiency.

STEAG State Power is a joint venture between Evonik Steag GmbH of Germany, which controls 51 per cent of the generator, and local partners Aboitiz Power Corporation and La Fiipina Uy Gongco Corporation, which hold the remaining 34 per cent and 15 per cent, respectively.

According to Erramon Aboitiz, president and CEO of Aboitiz Power, Mindanao needs more stable baseload capacity and also needs to diversify its generation sources to be less dependent on hydro.

“This addition to STEAG State Power is the logical way to achieve this. This project assures Mindanao of reliable and cost-effective power to fuel its continued economic advancement.”

STEAG State Power expects to complete the expansion of the coal plant by 2013.

In the first half of this year, Mindanao, which is the Philippines' second largest island, suffered from a severe generation deficit because of low water levels in the region’s hydroelectric power plants, which normally supply up to 70 per cent of power to the grid.

STEAG State Power sells its output to state-owned National Power Corporation, but the new facility will sell power to interested utilities or industries in the form of long-term sales agreements says the company.

Depending on the interest in the market, the consortium may decide to build additional generating capacity, reports the Manila Times.

The expansion of the plant is part the company’s previously announced plan to grow its coal generation portfolio across the country over the next five years.

The group has yet to finalize the financing for the proposed expansion but it is likely to focus on project finance loans. “The funding of that will be a combination of debt and equity,” Aboitiz said.