San Miguel Corp., through its power generation arm SMC Global Power Holdings (SMC Power), is investing $1.5 billion for its two planned power projects that can generate a total of 900 megawatts for the Luzon and Mindanao grids.
In a briefing Tuesday, San Miguel president Ramon S. Ang explained that the planned coal-fired power plant in Bataan, worth an estimated $1 billion, is expected to generate 600 MW while the $500-million Davao coal facility will generate 300 MW.
According to Ang, construction of both coal-fired power plants started in January this year following the signing of engineering, procurement and construction contracts with Formosa Heavy Industries Corp. and True North Manufacturing Services Corp. for the planned facilities. Both are expected to start commercial operations by the middle of 2015.
The company’s cash flow would fund these facilities, he added.
However, Ang warned of a possible oversupply of electricity in three to four years as many facilities were expected to go online by then.
“With so many companies putting up power plants, there will be a lot of supply by 2015 and 2016, even those not previously in the power business are starting to build. And if these plants are not properly managed, power prices will fall and that will affect other players. Companies may overbuild. I hope they don’t get burned,” Ang explained.
Ang reiterated that SMC Power was expecting to raise as much as $800 million from its initial public offering this year.
“That will happen this year. It’s being arranged. We will have a combination of several local and foreign banks as our underwriter. We’re selling 49 percent,” Ang said.
San Miguel is the biggest power player in the country with an installed capacity of more than 3,000 MW. It plans to build natural gas- and coal-fired facilities to build another power portfolio with a combined capacity of 3,000 MW.
SMC Power earlier reported that it was also targeting to build power facilities in Cavite (1,200 MW), Leyte (600 MW), Panay (150 MW) and South Cotabato (150 MW).
San Miguel previously acquired three coal mines in South Cotabato that have resources capable of powering a 750-MW facility over the next 25 years.