Power projects of SMC units get BOI incentives

San Miguel Corp. has secured approvals from the Board of Investments for P51 billion worth of coal-fired power projects that are expected to significantly shore up power supply in Luzon and Mindanao in three years’ time.

According to the BOI, the approvals covered the 300-megawatt coal-fed power project of San Miguel Consolidated Power Corp. (SMCPC) in Malita, Davao del Sur, and the  proposed 300-MW coal-fired plant of SMC Consolidated Power Corp. in Limay, Bataan.

The approvals will give the subsidiaries of SMC various fiscal and non-fiscal incentives for their projects, notably income tax holidays. Power plant projects are listed in the preferred activities under the energy sector category of the Investment Priorities Plan (IPP).

Documents from the BOI showed that San Miguel Consolidated Power is expected to invest P25.84 billion for the Davao coal-fired plant, whose commercial operation is targeted to start by December 2015. The project is projected to employ 214 personnel.

The entry of San Miguel’s facility in the Mindanao grid will significantly boost the power reserves in the area and ease the worsening power supply crisis on the electricity-starved island.

Based on the Department of Energy’s Power Development Plan, peak demand for electricity in Mindanao is forecast to increase at an average annual rate of 4.2 percent until 2030. This means that Mindanao will require an additional capacity of 550 MW, on top of committed power projects, by 2018.

Meanwhile, SMC Consolidated Power is expected to invest P25.5 billion for the Bataan coal facility, which is projected to generate at least 214 new jobs when it starts operations by 2016.

According to the BOI, both power projects will import coal either from Indonesia or Australia during the commissioning and start-up operation. Coal samples from these countries reportedly have higher heating values compared to the local supply.

The two subsidiaries, however, are expected to eventually use local coal coming from the Daguma coal mines, which are owned by affiliate San Miguel Energy Corp. (SMEC).

San Miguel is the biggest power player in the country with an installed capacity of more than 3,000 MW. Its goal is to build natural gas- and coal-fired facilities to build another power portfolio with a combined capacity of 3,000 MW.