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6 March 2010

Philippines: San Miguel plans $2 billion power plant

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Power capacity in the southern province of Mindanao is expected to get maximum shoring up with the 2,000-megawatt mine-mouth facility being proposed by San Miguel Energy Corporation (SMEC) to be undertaken in phases, the Manila Bulletin reported.

At $1 million per megawatt estimated investment, SMEC will have capital infusion of up to $2 billion for the greenfield capacity, but it was not specified when is the exact timeframe to complete the entire proposed capacity.

In an interview with reporters, SMEC president Ramon S. Ang said the initial capacity could range from 150 to 300 megawatts at the company’s proposed site in General Santos. The capacity planning will also be aligned with the projected demand growth in the grid.

“We are still doing our feasibility study (on the project),” Ang noted, but when proposals push through, he stressed that the first unit is expected on stream by 2012. “It will take 24 months to build the first unit,” he added.

The project, when completed, he said will have comparable tariff to the existing grid rate in Mindanao; since the fuel will be sourced on-site.

Nevertheless, San Miguel will have to cross the hurdle of market cap policy under the Electric Power Industry Reform Act (EPIRA), which is set at 30-percent per grid and 25-percent on a national basis.

Ang said applications for environmental compliance certificate (ECC) with the Department of Environment and Natural Resources (DENR) as well as the filing for coal operating contract (COC) with the Department of Energy (DoE) are currently being prepared.

Currently, Mindanao is being plagued by worsening power outages due to the strike of El Niño phenomenon. The drought situation resulted in drastic decline in water level at Lake Lanao, which is the main source of water supply for the Agus hydropower plants.


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