Danessa Rivera (The Philippine Star)
- March 21, 2018 - 12:00am
MANILA, Philippines — Redondo
Peninsula Energy Inc. (RP Energy) is renegotiating its engineering, procurement
and construction (EPC) contract with its South Korean contractor to build the
first phase of its 2x300-megawatt (MW) coal-fired power plant in Subic,
Zambales.
RP Energy is a consortium composed
of Meralco PowerGen Corp. (MGen), Aboitiz Power Corp. and Taiwan Cogeneration
International Corp.
In a statement, RP Energy said it
sent a letter of contract termination to its EPC contractors, Korean firm
Doosan Heavy Industries & Construction Co. Ltd. and local company Azul
Torre Construction Inc.
Under the terminated contract, the
validity of the price expired at end-December 2016 “because RP Energy was not
able to issue a Notice-To-Proceed to Doosan without the PSA (power supply
agreement) approval from the ERC (Energy Regulatory Commission).”
RP Energy signed a construction
contract with Azul Torre and a supply contract with Doosan on Oct. 13, 2016.
Azul Torre is a local construction company based in Subic, Zambales , in which
Doosan has a stake in.
To move the power plant forward, RP
Energy said it is in discussions with Doosan on a new EPC arrangement.
“We are waiting for a revised EPC
from Doosan which they said they would submit end of April,” MGen president and
CEO Rogelio Singson said.
Last week, Doosan’s parent firm,
Doosan Co. Ltd. last week disclosed to the Korea Exchange that it received the
cancellation letter from RP Energy.
“Notwithstanding the contractor’s
cancellation notice of the contractor’s project, the contractor and the contractor
are in negotiations for the resumption of the project,” Doosan said.
RP Energy said it remains committed
to building a new power plant that would boost the baseload power supply in the
Luzon grid and support the government’s Build Build Build program.
“The project is classified as a
committed project by the Department of Energy (DOE) and is approved and
registered with the Board of Investments,” it said.
However, pushing for the development
of coal-fired power plants would only result in consumers paying higher
electricity rates, according to energy research institution Center for Energy,
Ecology, and Development (CEED).
CEED executive director Gerry
Arances said coal spells out higher electricity prices since coal is already
more expensive than wind and solar energy.
Under the seven coal PSAs, the
average rate of coal electricity is P3.65 per kilowatt-hour (kwh), while wind
and solar are at a lower rate of P3.50 per kwh and P2.99 per kwh, respectively.
Arances said what is usually left
out in Meralco and other coal giants’ pressure for more coal is the global
transition away from coal, which puts facilities like coal-fired power plants
at risk of becoming stranded assets.
He cited a study conducted by the
Institute for Energy Economics and Financial Analysis (IEEFA) and the Institute
for Climate and Sustainable Cities (ICSC) which showed that stranded coal
assets are a growing material risk that is inevitable in the Philippines.
According to the IEEFA and ICSC
study, Arances said trends in the coal-fired electricity generation sector,
such as the overbuild of coal-fired power plants, “may leave rate payers at
risk of having to pay above-market prices.”
“If Meralco and its coal affiliates
have their way in the approval and operation of their coal plants, Philippine
electricity consumers are to be locked into not only 20 more years of dirty and
steadily increasing electricity prices, but also into paying for stranded asset
costs of obsolete coal plants,” Arances said.
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