Meralco unit scales down Subic power project

MERALCO PowerGen Corp. (MGen), the energy arm of the Manila Electric Co. (Meralco), may change the project parameters of its proposed 600-megawatt (MW) power plant in Subic, Zambales, due to transmission constraints.

“We might have to drop to around 300 MW because there were issues on the transmission line connection to the grid,” Meralco chair Manuel V. Pangilinan said. “We might have to start with 300 MW first.”

Meralco scored a legal victory earlier this year when the Supreme Court upheld the environmental permits and agreements that would pave the way for the 600-MW coal plant of Redondo Peninsula Energy Inc. (RP Energy) in Subic, Zambales, to be developed.

RP Energy is a consortium composed of MGen, AboitizPower Corp. and Taiwan Cogeneration.

The current issue is that the areas of transmission line from the power plant to the grid will have to traverse protected areas and places with indigenous people.

“The ideal alignment has areas occupied by indigenous people and there are pockets where there are reserved areas: Wooded, forested. We cannot build on top of that. That’s prohibited by law,” he said.

Meanwhile, the 500-MW Mauban/San Buenaventura coal power plant in Quezon province is all set to go with the engineering procurement and construction already decided, Pangilinan said.

Through MGen, Meralco is set to borrow P100 billion this year from local banks to fund the two projects.

Meralco president Oscar S. Reyes said the deal with the syndicate of banks would likely be closed around the third quarter.

Financing for San Buenaventura alone is about P40 billion, said Meralco CFO Betty Siy-Yap. The development cost for the power plant is P49.5 billion.

The Energy Regulatory Commission (ERC) has approved the power sales agreement between San Buenaventura Power Ltd. Co. and Meralco for the supply of 455 MW of net capacity over 20 years.

This secures an offtaker for the project, paving the way for construction and development to proceed.

MGen, a subsidiary of Meralco, is developing SBPL via a joint venture with New Growth B.V., a 98-percent owned subsidiary of Thailand’s Electricity Generating Public Co. or Egco, forged in August 2013.

MGen has a 51-percent stake in the project and the rest is held by Egco through New Growth.

The new 460-MW facility is in the same site as the existing 460-MW coal plant owned by Quezon Power Philippines Ltd., which is majority controlled by Egco.

The new plant is set to be completed around 2018.