San Miguel, JG Summit confirm Meralco talks

Manila Standard Today
By Alena Mae S. Flores

San Miguel Corp. and JG Summit Holdings Inc. on Wednesday confirmed they are in talks for the sale of the former’s shares in power distributor Manila Electric Co.

San Miguel and JG Summit issued separate disclosures to the stock exchange on Wednesday confirming their negotiations.

“We advise that the company is in talks with JG Summit Holdings Inc. with respect to the shares of stocks of the company and its subsidiaries in Manila Electric Company,” San Miguel said.

The parties did not say whether the discussions involved JG Summit’s acquisition of San Miguel’s entire stake in Meralco.

San Miguel is divesting the remaining 27.1-percent stake in Meralco to raise funds for its business ventures.  The company in July sold a 5.7-percent stake in Meralco for P17.4 billion to fund its diversification plan.

San Miguel sold 64.3 million shares at P270 apiece.  Buyers of the Meralco shares were state-pension fund Government Service Insurance System and Metro Pacific Investments Corp.

San Miguel earlier disclosed to the local bourse the company and its subsidiaries were considering alternatives relating to the possible disposition of approximately 32.8 percent in Meralco “through a strategic sale or a capital markets transaction, to parties who have expressed an interest in purchasing such shares.”   source

Villar Group firms up plan for new power plants

By Donnabelle L. Gatdula (The Philippine Star) | Updated September 26, 2013 - 12:00am

MANILA, Philippines - Prime Asset Ventures Inc. (PAVI), the holding company of the group of businessman Manuel Villar, is firming up plans to put up new power plants in off-grid areas in Luzon and Visayas within the year.

PAVI consultant Froilan Tampinco, in an interview on the sidelines of the three-day Powertrends 2013 Conference, said the power unit of the group is eyeing to initially construct a 6.5 MW diesel-fired power facility.

Tampinco did not identify the name of the company that will handle the power  projects but said it would be the power arm of the group.

In 2011, the Villar group incorporated Kratos RES Inc. to primarily serve as a Retail Electricity Supplier (RES) unit. Initially, Kratos RES plans to supply eligible commercial, and industrial and residential end-users with its affiliate companies and business partners.

In the near future, Kratos RES is seen to be involved in power generation for supply security.

“PAVI is actually looking at all opportunities in the off-island, off-grid areas. We are practically new entrant so we are looking at all possible areas of investments in the power industry but we would like to start in the off-grid areas,” he said.

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Initially, he said the group would tie up with an existing power company which would operate and maintain the power plant.

“We will be putting in equity and will be the owner of the plant but the O & M will be handled by our joint venture partner,” he said.

He said they are also looking at a power project in Palawan.

Tampinco, however, said they have still to firm up supply agreement with off-takers.

“We will supply electric cooperatives in these islands. But we have yet to finalize the agreements,” he said.  source

Mindanao power shortfall seen easing up with new capacity

By Donnabelle L. Gatdula (The Philippine Star) | Updated September 26, 2013 - 12:00am

MANILA, Philippines - Additional capacity is expected to come in starting today (Sept. 26) to the Mindanao grid to ease up the power supply shortfall of the province, Energy Secretary Carlos Jericho Petilla said.

Petilla said the additional power would be supplied by the Interim Mindanao Electricity Market (IMEM) which would commence commercial operations today (Sept. 26).

IMEM, he said, is also seen as a pilot test for Mindanao’s eventual transition to the Wholesale Electricity Spot Market (WESM) in Mindanao, once adequate power generation is established for the island-region.

Petilla said with the presence of the Mindanao spot market, power would no longer be a problem for the province in the near term.

“I am not really too much worried about Mindanao in the long-term because by 2015, especially in 2016, there will be enough power to the extent that there will be oversupply in the region,” Petilla said.

The DOE chief said IMEM aims to provide the platform for the electricity market in Mindanao and address the island’s supply shortfall.

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 The electricity market is expected to draw in about 100 to 150 megawatts (MW) of power, with supply-deficient electric cooperatives likely to buy capacity requirements.

“IMEM is not here as a final institution with final rules.  It will react according to the needs of the electricity market rather than put out final procedures that cannot be changed,” Petilla said.

He added that IMEM is by far the most dynamic way of extracting uncontracted and available power capacities in Mindanao.

IMEM is designed to provide an immediate venue for transparent and efficient utilization of additional capacities to address Mindanao’s energy supply shortfall. This commercial electricity market would allow energy distributors to sell power supply from its embedded generators to areas with a supply deficit. 

All of the distribution utilities and other generation capacities connected to the Mindanao power system are mandated to participate in the IMEM. However, the market is also encouraging the participation of the voluntary load customers through load curtailment or synchronized self-generation.

“We are assured of sufficient supply two years from now, but in the meantime we welcome the upcoming operations of Mindanao’s own electricity market to ease up deficiency,” said Mindanao Development Authority chairperson Luwalhati Antonino.

Antonio said although load curtailment are expected in parts of Mindanao mainly due to scheduled preventive maintenance of some power plants, the entry of capacities in the IMEM would result to better power outlook.

Since last year, many areas in Mindanao such as Zamboanga City and General Santos City were affected with rotating brownouts of up to six- to eight hours.

“We will extract every possible source we can find, with the dispatch protocol made fully transparent to all players,” said Petilla, adding that no electricity market would operate without a transparency mechanism.   source

Mindanao power market starts

Manila Standard Today
By Alena Mae S. Flores 

The Interim Mindanao Electricity Market starts commercial operation today, as the government aims to use the power trading platform to manage electricity supply and address the power shortage in the south.

The electricity spot market is expected to draw in 100 to 150 megawatts of power, with supply-deficient electric cooperatives likely to buy capacity requirements.

“With the interim market’s commercial launch, we are reminded that, as major players and contributors in this evolving power industry, we are given the opportunity to deal with problems like supply shortfalls and challenges head on and play a significant role in making the IMEM a success,” Philippine Electricity Market Corp. president Melinda Ocampo said in a statement.

Ocampo said the success of the IMEM was in the hands of industry stakeholders in Mindanao.

“As the IMEM operator, PEMC can only do as much in ensuring that the established systems and processes adhere to the approved IMEM Rules and that we follow our designation/assignment in the dispatch protocol,” she said.

Energy Secretary Carlos Jericho Petilla said the IMEM aimed to provide the platform for electricity market in Mindanao, in an effort to help address the island’s supply shortfall.

“IMEM is not here as a final institution with final rules.  It will react according to the needs of the electricity market rather than put out final procedures that cannot be changed,” Petilla said.

He said IMEM was by far the most dynamic way of extracting uncontracted and available power capacities in Mindanao.

IMEM is designed to provide an immediate venue for transparent and efficient utilization of additional capacities to address Mindanao’s energy supply shortfall.

This commercial electricity market will allow energy distributors to sell power supply from its embedded generators to areas having deficit.

All distribution utilities and other generation capacities connected to the Mindanao power system are mandated to participate in the IMEM. However, the market also encourages the participation of the voluntary load customers through load curtailment or synchronized self-generation.

“We are assured of sufficient supply two years from now but in the meantime, we welcome the upcoming operations of Mindanao’s own electricity market to ease up deficiency,” said Mindanao Development Authority chairman Luwalhati Antonino.

She said while load curtailment were expected in parts of Mindanao mainly due to scheduled preventive maintenance of the some power plants, the entry of capacities in the IMEM would result in better power outlook.   source

Apervi to build coal-fired power plant in Cadiz

By Katlene O. Cacho

Wednesday, September 25, 2013

ASIA Pacific Energy Resources Ventures Inc., (Apervi), a Cebu-based coal trading and mining equipment distribution

company, is investing P14 billion to build a 150-megawatt (MW) coal-fired power plant in Cadiz City, Negros Occidental.

Apervi president Ceasar Lao-as announced that its subsidiary North Negros Energy Power Corp. (NNEPC) is developing a coal-fired power plant in the 10-hectare reclamation site in Cadiz City’s commercial port in Brgy. Banquerohan.

The phase 1 of the construction will initially produce 150 MW but is expandable to 300 MW. According to Lao-as the company is currently securing the environmental compliance certificate (ECC), among other requirements, but they have already conducted a series of public hearings.

As soon as documents are completed, the construction will immediately start but the facility will be fully operational by 2016.

Apervi is involved in coal trading, safety and mining equipment distribution and consultancy services for mining engineering, mine planning and environment. The company is also building a two-hectare coal terminal in Cadiz capable of storing about 200,000 metric tons of coal that can be supplied to nearby sugar mills, power plants, cement plants and other industrial operations.

Apervi was established in 2011. It is also a partner of the Panpisco Group of Companies that supply industrial equipment in the Philippines.

The coal-fired power plant project in Cadiz is their first foray into the energy industry.

“This is intended to support the growing need for electricity in the Visayas, particularly in Negros,” said Lao-as.

He said 80 percent of power distributed by power cooperatives in Cadiz is imported from Cebu. Residents there are currently paying P12 per kilowatt hour.

“With the power plant in place, we expect power prices to be similar to Cebu at P6-7 per kilowatt hour,” Lao-as said.

He said there is a need to put in place power infrastructure in Negros, given its rapid development. He said that from being an agricultural province, Negros is now slowly becoming industrialized with the entry of retail establishments and business process outsourcing (BPO) companies.

Negros is the country’s sugar plantation hub. Fishing is also the province’s other source of income.

Lao-as said that it is time that Negros build its own power plant because if it would continue to rely on Cebu’s power supply, it faces a power shortage in the long run.

“Cebu is expanding so is the demand of power. Given that scenario, where else would Negros source its power if supply from Cebu is already scarce?” he said.

Currently, the supply available in the Visayas grid stood at 1,700 MW while the estimated demand is 1,900 to 2,000 MW.   source

DOE hopes to address Mindanao’s energy shortfall through IMEM

Business Mirror

Published on Wednesday, 25 September 2013 20:35

Written by Manuel T.Cayon

DAVAO CITY—The Department of Energy (DOE) hopes to extract as much as 150 megawatts (MW) from built-in and standby power of the private sector after it formally launched the operation of an electricity market in Mindanao, a move that puts equivalent monetary amount for the use of these embedded power from corporations.

The Interim Mindanao Electricity Market (IMEM) would start operating on Thursday and would be the temporary market for electricity supply that electric cooperatives and distribution utilities in the area can access for their load volume.

The main source would still be the hydroelectric power churned out by several government-run power plants along the Agus River in Lanao del Sur and Lanao del Norte, and from the single plant in Pulangui River in Maramag, Bukidnon.

“All of the distribution utilities and other generation capacities connected to the Mindanao power system are mandated to participate in the IMEM. However, the market is also encouraging the participation of the voluntary load customers through load curtailment or synchronized self-generation,” Energy Secretary Carlos Jericho Petilla said.

Petilla was here last week to launch the IMEM.

He said the commercial electricity market “would allow energy distributors to sell power supply from its embedded generators to areas having deficit,” he said.  

“IMEM is designed to provide an immediate venue for transparent and efficient utilization of additional capacities to address Mindanao’s energy supply shortfall,” he said.

The electricity market is expected to draw between 100 mw to 150 mw of power, “with supply-deficient electric cooperatives likely to buy capacity requirements,” he added.

Before the IMEM, industry officials appealed to corporations to use their embedded power generators and big-capacity generator sets during peak hours so that the freed megawatts would be used to offset the long hours of brownouts in other areas.

This year’s load curtailment scheme hit the hardest the Zamboanga Peninsula and the Cotabato provinces, whose electric distributors have no additional power sources other than the supply from the National Power Corp.

As reports came in about corporations having their own power generation sets that were not being connected to the grid during their long standby periods, the energy sector suggested to apply the electricity market to encourage corporations to connect their generator sets to the grid for a fee.

“The IMEM is not here as a final institution with final rules.  It will react according to the needs of the electricity market rather than put out final procedures that cannot be changed,” Petilla said.

He said the IMEM “is by far the most dynamic way of extracting uncontracted and available power capacities in Mindanao.”

“We will extract every possible source we can find, with the dispatch protocol made fully transparent to all players,” Petilla said.

He promised that “no electricity market will operate without a transparency mechanism.”

“We are assured of sufficient supply two years from now but in the meantime, we welcome the upcoming operations of Mindanao’s own electricity market to ease up deficiency,” Secretary Luwalhati Antonino, chairperson of the Mindanao Development Authority, said.

She said though that load curtailments would still be expected in parts of Mindanao in the coming months “mainly due to scheduled preventive maintenance of the some power plants”. But she said “the entry of capacities in the IMEM would result to better power outlook”.

Petilla said the IMEM would be a “pilot test for Mindanao’s eventual transition to Wholesale Electricity Spot Market in Mindanao, once generation adequacy is established for the island-region.”

“I am not really too much worried about Mindanao in the long-term because by 2015, especially in 2016, there will be enough power to the extent that there will be oversupply in the region,” Petilla said.   source

Samal power crisis looms as submarine cable deteriorates

Business Mirror

Published on Wednesday, 25 September 2013 20:05

Written by Cha Monforte / Correspondent

OFFICIALS of the Island Garden City of Samal reiterated fears of a power crisis here as they say the 30-year-old submarine cable used to supply power to the entire island from Davao City might give up soon.

City Administrator Cleto Gales said in an interview that the submarine cable of the Davao del Norte Electric Cooperative (Daneco) is “already on its advanced state of deterioration.”

Its load capacity of 5-megawatts is no longer enough to meet the increasing power requirement of the island, Gales added. 

He said that last summer, the power load running into the submarine cable breached its load capacity by registering 5.2 MW. This forced Daneco to put the entire island on rotational brownout scheme so as not to overstress the submarine cable, he added.

But now, Gales said, they are experiencing power outages that lasts for four hours, without schedule.

“There’s a power crisis in the island. Our power crisis is three-pronged. It is on top of the Mindanao power crisis and it is due to the intramurals between Daneco-NEA and Daneco-CDA groups.”

The submarine cable is the third prong, Gales said, adding that it had already been cut and spliced five times.

He recalled that at one time, a cargo ship dragged it. 

The cable’s submerged part is 1-kilometer stretch connected from substation and distribution lines of Davao Light and Power Corp. in Pampanga area, Davao City.

The latest bogging down of the submarine cable caused by the breakup of one splice was in 2011 where it took two weeks for Daneco to repair and resume energizing the island.

“It is still functioning at critical level during peak hours, and with its advanced state of deterioration, we fear that anytime soon, it will give up and put the entire island in the dark.”

A memorandum of agreement was forged between Daneco, Davao Light and the city government more than two years ago, giving the latter a contractor-like function to distribute and manage power in the island.

But the deal was aborted by the ensuing factional intramurals between the Daneco-NEA and Daneco-CDA groups, Gales recalled.

At present, the Daneco-NEA group was chosen as the single entity to manage Daneco following favorable decision of the Court of Appeals last month on legitimacy and CDA registration-related cases filed during their two-year legal and administrative battle.   source

San Miguel in talks to sell Meralco stake

Business World Online

Posted on September 25, 2013 12:22:53 AM

SAN MIGUEL CORP. yesterday said it was in talks to sell more shares in Manila Electric Co. (Meralco) as the country’s most diversified conglomerate seeks to raise cash for several infrastructure ventures.

Meralco services Metro Manila and nearby provinces. -- BW File Photo

  San Miguel President Ramon S. Ang told Reuters the company was in talks with holding firm JG Summit Holdings, Inc. to sell a stake in Meralco, the country’s biggest electricity retailer with a market value of around $7.2 billion.

He declined to specify the size of the stake but San Miguel owns 27.1% of the Manila-listed power retailer. There was no immediate reply from JG Summit when asked about the issue.

Meralco’s biggest single shareholder is Beacon Electric Asset Holdings, Inc., which is owned by Metro Pacific Investments Corp. and Hong Kong’s First Pacific Co. Ltd.

Beacon had said it was not keen to buy more shares in Meralco because that could trigger a general share offer. The group now owns nearly 50% of the power firm.

In July, San Miguel sold a 5.7% stake in Meralco, raising $400 million to fund expansion plans that include beefing up of other power assets.

San Miguel’s shares, which had risen to their highest in almost five months on market speculation that it was seeking to sell a stake in Meralco, closed 5.6% higher yesterday. Meralco and JG Summit ended largely steady.

San Miguel, which started as a brewery more than a century ago, has aggressively expanded over the last four years into power, airlines, mining, telecoms, oil refining and distribution, and infrastructure. -- Reuters   source

Petilla wants creation of power reserve market

Manila Bulletinby Myrna VelascoSeptember 25, 2013

An accelerated timeline was laid down by Energy Secretary Carlos Jericho L. Petilla for the establishment of a reserve market – not by year-end but possibly a date earlier than that.

He disclosed that he will be meeting with the Energy Regulatory Commission (ERC) by the end of this month to discuss the remaining submissions and other documentary requirements that the Philippine Electricity Market Corporation (PEMC) must comply with to finally wheel into motion the setting up of the reserve market. The energy secretary is the chair of the Philippine Electricity Market (PEM) Board.

“By September 30, we will have a meeting with the ERC to discuss remaining issues on the regulatory framework for the reserve market. I cannot give details for now but I have already set a timeline (for PEMC) as to when I would want it done,” Petilla said.

PEMC President Melinda L. Ocampo confirmed that the energy chief indeed gave a specific date on the targeted launch of the reserve market, “and it’s a schedule that almost made us fall from our chairs… he wants it done soon, so we have to deliver.”

The reserve market sets a trading platform for the offers of ancillary services (AS) requirement of the National Grid Corporation of the Philippines (NGCP) so it can ensure quality, as well as security and reliability of the power system.

Based on PEMC’s plan, the AS capacities that may be traded in the market will cover: Frequency regulating reserve, contingency as well as dispatchable reserves.

For reactive power support and black start services, Ocampo said these are excluded, hence, they must still be contracted by system operator NGCP.

The establishment of the reserve market is already integrated in the existing algorithm of the Wholesale Electricity Spot Market (WESM); although Ocampo noted that some adjustments will have to be done in its market network model.

Department of Energy (DOE) director Mylene Capongcol emphasized that prior to the commercial operations of the reserve market, certification of AS provider power plants must first be accomplished.

“We are already preparing the protocols for testing and certification of power plants which can qualify for trading into the reserve market. If they fail in the testing and qualification process, they cannot bid their capacities for AS,” she stressed.

That, plus the regulatory approval on the AS trading process flow and cost recovery schemes are among the remaining works that the DOE, ERC and PEMC will have to work on for the envisioned marketplace of power system reserves.   source

PSALM to post P2-b cash flow

Manila Standard Today
By Alena Mae S. Flores 

Power Sector Assets and Liabilities Management Corp. is expected to end the year with an additional cash flow of $2 billion, which it plans to use to pay debts, the company’s president said Tuesday.

PSALM, the agency in charge of managing the assets and liabilities of state-owned National Power Corp., is expected to receive the full payment from the sale of the 218-megawatt Angat hydropower plant in Bulacan by November.

K-Water Resources Corp. of Korea acquired the Angat hydropower plant from the government for $440.88 million in 2010.

K-Water and PSALM recently signed a certificate of effectivity that paved the way for the turnover of the asset to K-Water.

“We issued the certificate for effectivity for Angat. They have 270 days to pay under the COE but they indicated verbally that within 90 days, they will pay the full amount so that’s additional…  $500 million,” PSALM president Emmanuel Ledesma Jr. told reporters at the sidelines of a budget hearing at the Senate.

Ledesma said K-water committed to pay by November while PSALM recently received the $1.5-billion prepayment of concession fees from National Grid Corporation of the Philippines.

“That’s a lot of money coming in for PSALM,” Ledesma  said.

Ledesma said talks with National Grid, operator of the country’s power transmission highway, over the prepayment of the remaining $1.2 billion in concession fees were ongoing.

“I asked if [National Grid was] interested in prepaying the remaining $1.2 billion. They said they are open to discussing,” he said. “I don’t think it [additional prepayment] will happen this year. Next year, maybe.”

Ledesma said PSALM was also in talks with San Miguel Corp. and Aboitiz Power Corp. to prepay their remaining fees to the government amounting to around $3 billion.

“San Miguel has roughly  $2 billion and Aboitiz has $1 billion. So we are exploring. We’re in discussions and there’s a chance we may move forward,” Ledesma said.

Ledesma said PSALM would use the proceeds from the prepayment to pay maturing debts and the rest for capital expenditures.   source