SMC sells Bataan power plant
MANILA, Philippines—SMC Global Power Holdings Corp., the power generation unit of conglomerate San Miguel Corp., has sold its 620-megawatt combined cycle power plant in Limay, Bataan, to the privately owned Millenium Holdings Inc.
A company document showed that SMC Global had approved the sale of its 100-percent stake in Panasia Energy Holdings Inc., a wholly-owned subsidiary of San Miguel, to Millenium Holdings, after which a share purchase agreement was later signed between the parties.
An industry source told reporters that Millenium Holdings has yet to take over the operations of the Limay diesel facility as both parties had yet to complete the necessary requirements concerning the sale. PanAsia Energy will still continue to operate the power plant pending the completion of the paperwork.
At present, the output of the Limay powert plant is traded at the Wholesale Electricity Spot Market under PanAsia.
In an earlier report to the Philippine Stock Exchange, San Miguel said that the “completion of the sale is subject to certain conditions, including obtaining the relevant corporate and government approvals, such as the Board of Investments.”
San Miguel president Ramon S. Ang already confirmed in September the plan to divest itself of the Limay facility after only two years of operating the facility, primarily because the cost of diesel fuel for the power plant was too high.
The company acquired the Bataan plant in 2009, after it offered $13.5 million via a negotiated sale.
Sources noted that another reason for the divestment was that San Miguel, currently the biggest power generation company in the Philippines, is preparing for its other proposed power plant projects over the next several years.
With 3,148.48 megawatts in its power portfolio as of September 2011, San Miguel is barely 4 percent away from breaching the 25-percent national grid market cap. As such, San Miguel would need to divest either some of its assets or part of ownership in the facilities, if it wanted to pursue plans of building a 3,000-MW greenfield power portfolio over the next six years.
In February this year, Ang said that San Miguel was prepared to invest around $1 billion to expand and convert the Limay power plant into a liquefied natural gas-fired facility. Studies however indicated that it was best for the company to dispose of the plant and build a new facility.
Last year, at the height of the prolonged drought, the Limay power plant provided relief to Luzon customers as it had then operated as a must-run unit (MRU). An MRU is a power generation facility that is deemed necessary under certain operating conditions as this helps secure the country’s supply. The company, in turn, would receive additional compensation for being designated as an MRU.
Commissioned in 1993, the Limay power plant comprises two 310-MW modules, Blocks A and B, which consist of three 70-MW gas turbines and a 100-MW steam turbine, respectively. Located in Limay, Bataan in Central Luzon, or approximately 145 kilometers west of Manila, the plant is designed to meet the base-load demand of the Luzon grid.
