SMC ditches $1B power project

Conglomerate San Miguel Corp. has permanently shelved plans to pursue the $1-billion conversion of the 620-megawatt Limay combined cycle facility in Bataan, and is now preparing to sell the power asset to a group of investors.

San Miguel president Ramon S. Ang confirmed that the company would let go of the Limay power plant after only two years of owning and operating the facility.

The company, through energy investment arm San Miguel Energy Corp., bagged the Bataan plant in 2009, after it offered $13.5 million through a negotiated sale.

Ang explained that because the cost of diesel fuel was too high, San Miguel decided to sell the Limay power facility.

However, he declined to identify the group of buyers.

According to sources, San Miguel is now preparing for the acquisition of other power plants over the next several years, which is why it now wants to sell the Bataan facility.

San Miguel is currently the biggest power generation company in the Philippines.

With 3,148.48 megawatts in its power portfolio, San Miguel is barely 4 percent away from breaching the 25-percent national grid market cap—or the limit set on the power capacity that a single company or group can generate to protect consumers from monopoly and market power abuse.

As such, San Miguel will need to divest either some of its assets or shares in facilities it has interests in, if it wants to pursue plans of building a 3,000-MW greenfield power portfolio over the next six years.

In February this year, Ang had said that San Miguel would invest around $1 billion to convert and expand the Limay power plant, into a liquefied natural gas-fired facility. At that time, the company was conducting a study to determine the viability of not only converting the facility to run on LNG, but to also double the power plant’s capacity to 1,200 MW.

Sources noted that the sale of the Limay plant was an offshoot of that study, which suggested that it would be best for the company to just dispose the power plant and build a new facility.

Commissioned in 1993, the Limay power plant comprises two 310-MW modules, which consist of three 70-MW gas turbines and a 100-MW steam turbine. Located at Limay, Bataan, in Central Luzon, the plant is designed to meet the base-load demand of the Luzon grid.