Funds sought for Quezon coal plant expansion

Business World Online
Posted on October 29, 2014 10:46:00 PM
By Claire-Ann M.C. Feliciano, Senior Reporter

THE JOINT venture between Meralco PowerGen Corp. (MGen) and New Growth B.V. is planning to raise up to P40 billion to fund the 460-megawatt (MW) expansion of a coal-fired power plant in Mauban, Quezon.

Angelito U. Lantin, MGen senior vice-president and general manager, said that while negotiations for the engineering, procurement and construction (EPC) contract are ongoing, San Buenaventura Power Ltd. (SBPL) is also finalizing financing arrangements for the project. “We are finalizing our EPC with the preferred contractor. We are also in the process of selecting arrangers for the project financing,” Mr. Lantin told reporters on Monday.

“We are raising about P40 billion from the debt market,” he added.

SBPL is also awaiting regulatory approval for its power supply deal with Manila Electric Co. (Meralco), which will buy the electricity that will be generated by the project.

“We hope that within six months, it will be approved,” Mr. Lantin said.

“Everything is geared up for completion of these activities. We hope to issue a notice to proceed very early next year,” he added.

Meralco President Oscar S. Reyes, for his part, emphasized the importance of this power project: “We are fully aware of prevailing power supply and demand situation where I think the Luzon grid faces fairly thin reserves until new power plant capacities come into place.”

“We need to have this project before the summer of 2018 so that we have some degree of relief from the risk of red alert as demand continues to increase,” Mr. Reyes added.

In August last year, the subsidiaries of Meralco and Thailand-based Electricity Generating Public Co. Ltd. (EGCO) signed a joint development agreement for the new 460-MW coal-fired power plant. The agreement provides that Meralco’s unit, MGen, will hold a 51% stake in the project while EGCO’s unit, New Growth, will hold the remaining 49% stake.

The existing Quezon power plant -- which started commercial operations in May 2000 -- supplies the Luzon grid under a 25-year power supply deal with Meralco, which in turn distributes electricity in Metro Manila, Bulacan, Cavite and Rizal; as well as several parts of Batangas, Laguna, Quezon and Pampanga.

MGen is the power generation arm of Meralco, the country’s largest distribution utility.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. source