Aboitiz to push through with power projects

Business World Online

Posted on September 16, 2012 09:40:38 PM

THE ABOITIZ Group is moving forward with its two power projects as it recently submitted a renewable energy (RE) service contract to the Department of Energy (DoE) for the expansion of Magat hydroelectric power plant in Luzon and started negotiations for the supply contracts of its 300-megawatt (MW) coal plant in southern Mindanao.

The Aboitiz Group is waiting for the approval for its service contract to expand the Magat hydroelectric power plant in Luzon.

“We’re waiting for the RE service contract as we’ve actually submitted it and that should start it,” SN Aboitiz Power, Inc. President and Chief Executive Emmanuel V. Rubio said in an interview last week.

SN Aboitiz Power, Inc. (SNAP), the joint venture between Norway’s SN Power and the Aboitiz Power Corp., is awaiting the approval of the DoE as it submitted an RE service contract to expand Magat hydroelectric power plant.

Mr. Rubio said the company applied for 115-MW pump storage with the Energy Department. “This will increase the capacity of Magat by 115 MW in pump storage. Magat is currently at 360-MW capacity. After expansion, it will be at 475 MW,” he said.

Once it gets the department’s approval for the service contract, Mr. Rubio said the company will ready the funding of the expansion and proceed with the full feasibility that’s going to prepare the bids for equipment. He noted that SNAP will build the construction of the expanded capacity of Magat plant.

“Funding is not ready yet because we don’t have the service contract yet. Once we secure the service contract, we are going to prepare for bid for the contractors for the equipment. I don’t think we will do EPC (engineering, procurement and construction) contract bid. We will be the one doing it just like what we did in Ambuklao and Binga,” he said.

Mr. Rubio said SNAP is currently focused on the Magat expansion at the moment because of its scale. “Once we get the service contract it’s really going to make us busy because it’s really a big project and we’re working closely with NIA (National Irrigation Authority) on that one,” he said.

NIA is the government agency tasked with the operations of the Magat Dam and Reservoir, a multipurpose facility that prioritizes irrigation for farmlands in Isabela and adjacent provinces. The Magat plant, located in Ramon, Isabela and Alfonso Lista, Ifugao, uses the same water used in irrigation for its power generation and is dependent on NIA’s irrigation diversion requirement.

Also depending on how soon the DoE service contract will be approved, SNAP is targeting 2015 to 2016 for the expanded capacity of Magat to be on stream. “It will depend on the DoE service contract, but more or less around 2015, 2016. That’s the target for now,” Mr. Rubio said.

Meanwhile, the Aboitiz Group sees no problem in selling the supply contracts of its 2x150-MW circulating fluidized bed coal-fired power plant located at Barangay Binugao, Toril District, Davao City, and in Barangay Inayawan, Sta. Cruz, Davao del Sur due to looming power crisis in Mindanao, Aboitiz Power First Vice-President for Mindanao Affairs Manuel M. Orig said.

“[The supply contracts] are under negotiations. It’s going to be marketed, but we don’t foresee any problem marketing it because of the severe lack of power in Mindanao,” he said.

Mr. Orig noted that current power curtailment in Mindanao is 192 MW and goes as high as 300 MW due to the fire that caused in Agus hydro plants earlier this month. “We understand that in some places the brownouts, because of that curtailment, could run for two hours,” he added.

The 300-MW circulating fluidized bed coal-fired power plant, being built by subsidiary AP Therma South Inc., is expected to be fully operational by 2015. “We’re in full swing [in the construction]. We hope to finish it on schedule which is 2015. First phase of 150 MW will be by the last quarter of 2014 and the final phase of another 150 MW will be by 2015,” Mr. Orig said.

The funding for the coal plant is being undertaken solely by the Aboitiz Group. “Aboitiz has put up funding because the crisis in Mindanao is getting so severe and the company is determined to alleviate the situation. If we wait for partners, it might take time so we decided to do it on our own,” Mr. Orig explained.

On expanding the Davao coal plant, Mr. Orig said the area can accommodate another 300-MW plant, however, they are not discussing it yet.

“As of now, we’re not talking of expansion but if there’s a need, the group is open for expanding. The one we’re building is up to 300 MW, but the place can be expanded to add another 300 MW,” he said.

The group has earmarked P35 billion for the construction of the Davao coal plant. In July, Aboitiz signed $546 million worth of contracts with local and foreign contractors for the construction of the plant.

Shares of Aboitiz Power closed at P33.75 apiece on Friday, up 0.45% from Thursday’s close at P33.60 apiece. -- Danessa O. Rivera    source