| By Donnabelle L. Gatdula (The Philippine Star) Updated February 10, 2011 12:00 AM |
MANILA, Philippines - Diversifying conglomerate San Miguel Corp. (SMC) plans to spend about $1 billion for the conversion and expansion of its 620-megawatt (MW) Limay diesel-fired power plant into a liquefied natural gas (LNG) facility, a top company official said.
“There is an ongoing study to convert Limay. We want to see the viability putting up an LNG tank farm,” SMC president Ramon Ang told reporters yesterday.
He said they are also studying the possibility of expanding the capacity of the LNG facility up to 1,200 MW.
The SMC top executive said they would need at least $600 million for the conversion of the plant into an LNG facility and another $600 million to expand its capacity. To make an LNG facility efficient, it should have a minimum capacity of 1,200 MW.
But Ang noted that they are still waiting for demand to come in before they decide on the expansion. Demand is quite low now so we are on stand-by,” he said.
He pointed out, however, that the Limay power plant really needs to be converted.
“Last summer, this plant was always breaking down,” he said.
He is also optimistic that the economy would continuously grow and this would result in the need for additional capacity.
“We are seeing that the economy will grow so, therefore, we are very bullish in adding more capacity,” he said.
In August last year, there were talks that state-owned PNOC Exploration Corp. and SMC may enter into a joint venture for the conversion of Limay.
The Limay plant uses diesel as fuel and the government declared it as a must-run unit at the height of the brownouts that hit Luzon in late February. As a must-run unit, the Limay plant commanded a higher generation price at the wholesale electricity spot market.
PNOC-EC said in a regulatory filing that “preparation of business proposal for the conversion of Limay power plant and information is ongoing.”
It said the conversion is needed to provide anchor load that will justify the construction of the planned 140-kilometer Bataan-Manila (BatMan 2) pipeline.
BatMan 2 is part of the government’s proposed integrated liquefied natural gas project, located within the municipalities of Limay and Mariveles in Bataan, estimated to cost a total of $1 billion.
The integrated project is composed of an LNG receiving terminal in Limay, conversion of the Limay power plant, development of a 600-MW greenfield power plant inside the PNOC Alternative Fuels Corp. Industrial Park, and other related gas transport pipeline.
Earlier, SMC said it plans to invest $4 billion in high-growth areas such as infrastructure and energy over the next five years as it looks to double sales.
In its disclosure to the Philippine Stock Exchange, it said the planned investment would drive its sales toward P1 trillion by 2016, almost three times the expected level of sales this year.
SMC has dominated the Philippine food and beverage sector for decades, but has shifted focus because it sees greater opportunities in heavy industries.
It is one of the private investors that have expressed interest to participate in the bidding for government infrastructure projects under the Public-Private Partnership (PPP) scheme.
The conglomerate has outlined plans to sell one billion shares, potentially raising more than P200 billion ($5 billion), to fund expansion. It has appointed underwriters for the offer but has not specified a timetable for the issue.
Ang told reporters that they would launch the secondary offer “as soon as possible,” although it was unlikely to be ready this month.
“There is an ongoing study to convert Limay. We want to see the viability putting up an LNG tank farm,” SMC president Ramon Ang told reporters yesterday.
He said they are also studying the possibility of expanding the capacity of the LNG facility up to 1,200 MW.
The SMC top executive said they would need at least $600 million for the conversion of the plant into an LNG facility and another $600 million to expand its capacity. To make an LNG facility efficient, it should have a minimum capacity of 1,200 MW.
But Ang noted that they are still waiting for demand to come in before they decide on the expansion. Demand is quite low now so we are on stand-by,” he said.
He pointed out, however, that the Limay power plant really needs to be converted.
“Last summer, this plant was always breaking down,” he said.
He is also optimistic that the economy would continuously grow and this would result in the need for additional capacity.
“We are seeing that the economy will grow so, therefore, we are very bullish in adding more capacity,” he said.
In August last year, there were talks that state-owned PNOC Exploration Corp. and SMC may enter into a joint venture for the conversion of Limay.
The Limay plant uses diesel as fuel and the government declared it as a must-run unit at the height of the brownouts that hit Luzon in late February. As a must-run unit, the Limay plant commanded a higher generation price at the wholesale electricity spot market.
PNOC-EC said in a regulatory filing that “preparation of business proposal for the conversion of Limay power plant and information is ongoing.”
It said the conversion is needed to provide anchor load that will justify the construction of the planned 140-kilometer Bataan-Manila (BatMan 2) pipeline.
BatMan 2 is part of the government’s proposed integrated liquefied natural gas project, located within the municipalities of Limay and Mariveles in Bataan, estimated to cost a total of $1 billion.
The integrated project is composed of an LNG receiving terminal in Limay, conversion of the Limay power plant, development of a 600-MW greenfield power plant inside the PNOC Alternative Fuels Corp. Industrial Park, and other related gas transport pipeline.
Earlier, SMC said it plans to invest $4 billion in high-growth areas such as infrastructure and energy over the next five years as it looks to double sales.
In its disclosure to the Philippine Stock Exchange, it said the planned investment would drive its sales toward P1 trillion by 2016, almost three times the expected level of sales this year.
SMC has dominated the Philippine food and beverage sector for decades, but has shifted focus because it sees greater opportunities in heavy industries.
It is one of the private investors that have expressed interest to participate in the bidding for government infrastructure projects under the Public-Private Partnership (PPP) scheme.
The conglomerate has outlined plans to sell one billion shares, potentially raising more than P200 billion ($5 billion), to fund expansion. It has appointed underwriters for the offer but has not specified a timetable for the issue.
Ang told reporters that they would launch the secondary offer “as soon as possible,” although it was unlikely to be ready this month.
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