DOE Enlists New Coal Project

Manila Bulletin
By MYRNA M. VELASCO
February 14, 2012, 8:00am


MANILA, Philippines — The Department of Energy (DOE) has enlisted the entry of a new 200-megawatt coal-fired power project as a “committed facility” that will help plug capacity gap in the Visayas grid starting 2015.


In a letter sent to Roel Z. Castro, president of local firm Palm Concepcion Power Corporation, it has been emphasized that the project’s re-classification from an ‘indicative’ to ‘committed’ has been anchored on the request of the project sponsor so it can fast-track its financial closing processes.


The project’s corporate vehicle is a subsidiary of publicly-listed A. Brown Company, which is also involved in several energy undertakings, primarily in the upstream oil and gas sector.


In the energy sector’s language, a committed power project is something that is already incorporated in the country’s power development and has a definite timeframe on when it is expected to add to capacity; while an ‘indicative project” is a proposed venture but has yet to go through all the approval processes and has no definite timeline yet when it comes to implementation.


DOE Director Mylene Capongcol stated in the correspondence that “so as not to cause delay in your negotiation with BDO and consequently, in the project implementation, we hereby list your project as committed in the 2012 list of power projects.”


The project sponsor has not given any figure on the scale of investment they will have to sink in. But cost of rule of thumb for coal plants would indicate that they may need $460 million to $500 million for the facility.


The energy department strictly directed the project company though that it must complete its financial closing within stated timelines. Failing to do so will compel the DOE to revert the project’s status to an “indicative” one.


“The project’s financial closing should conclude before the finalization of the 2012 Power Development Plan and Transmission Development Plan by September 2012. Otherwise, we will re-classify back your project to indicative,” the DoE has stressed.


Based on project blueprint provided by the developer, the coal-fired plant will comprise of two units and these are targeted on stream by the third quarter of 2015 and November 2016.


Palm Concepcion Power similarly apprised the energy department that “BDO Capital has committed to arrange the project debt financing requirements of the project.”


In a letter by the project lender to Energy Secretary Rene D. Almendras last month, BDO stated that “the debt financing of the project is subject to DOE’s re-classification of the project from indicative to committed.”


The project company further pointed out that “in view of the capacity gap in the Visayas by 2015, we are looking at this project to provide the required capacities by 2015.” (MMV)