January 21, 2019 | 12:04 am
MERALCO
POWERGEN Corp. (MGen) will decide within the first half of the year if it will
convert its planned 600-megawatt (MW) coal power plant in Subic, Zambales into
a gas-fired facility, as the project hit delays in permitting and site
stability, its top official said.
“We should be making a
decision within the first half of this year regarding what to do next. But in
the meantime, we’re saying let this rainy season pass by and see the stability
of the site kasi (because) the stability of the site is another
challenge,” Rogelio L. Singson, MGen president and chief executive officer,
told reporters last week.
A unit of power
distribution utility Manila Electric Co. (Meralco), MGen is developing the
plant, which has two units, each with an identical capacity of 300 MW. It will
be under Redondo Peninsula Energy, Inc. (RP Energy), which it leads with a 47%
stake, along with the Aboitiz group’s Therma Power, Inc. with 25%, and Taiwan
Cogeneration International Corp. with 25%.
When the plant
developer announced the signing of construction and supply contracts in the
fourth quarter of 2016, it had expected the power plant to go online by
mid-2020 on Sitio Naglatore, Cawag, Subic Bay Freeport Zone.
The construction
contract was signed with Azul Torre Construction, Inc. while the supply
contract was with Doosan Heavy Industries & Construction Co. Ltd.
Based on data from the
Department of Energy (DoE) at that time, the project will cost P1.2 billion or
around P50 billion. Meralco had planned to source 225 MW of its baseload
requirements from RP Energy.
Mr. Singson said RP
Energy remains without an approved power supply agreement (PSA) from the Energy
Regulatory Commission.
“Unfortunately, the
negotiations with the Korean EPC (engineering, procurement and construction)
contractor — Doosan — gave us a one-year extension, which ended in 2017 because
the plant was supposed to have started 2016. But since we could not get a PSA,
it was extended for another year — end of December,” he said.
“So by end of December,
we had to talk to them again and they said: ‘we could no longer hold the
prices’ — foreign exchange has changed significantly, interest rates have
changed, and escalation prices and so on,” he added.
Mr. Singson said
without a PSA, the company had no recourse but to hold off the project.
“We will now open our
options not just with the Korean contractor but in fact, we’re now looking at
other options. It might be new technology. It might no longer be CFB
(circulating fluidized bed) because if I’m to be asked, I would only settle for
ultra-supercritical [plant],” he said, referring to the plant’s efficiency that
leads to lower emissions.
“Second, we’re also
considering puwede ba (whether it’s possible to convert it to) LNG
(liquified natural gas),” he said.
“We’re in that stage.
So our shareholders — Aboitiz, us and [Taiwan Cogeneration] — are on hold
position until we complete our technical assessment of what technology and
when,” he said.
In the meantime, Mr.
Singson said the company would assess the stability of the site, which he said
remains to be valuable because it has an adjacent transmission connection, a
ready environmental compliance certificate, and an approval from the Subic Bay
Metropolitan Authority. — Victor V. Saulon
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