Redondo Peninsula (RP) Energy Inc.—an affiliate of both the MVP and Aboitiz groups—has canceled a P46.3-billon order for two coal-fired generators from a South Korean contractor, citing the continued delay of regulatory action on related supply contracts and tariffs.
Doosan Co. Ltd. last week informed the Korea Exchange that its subsidiary, Doosan Heavy Industries and Construction Co. Ltd., received from RP Energy a letter of contract termination on March 13.
Based in Seoul, the Doosan group is engaged in infrastructure support businesses ranging from power generation, desalination and engines as well as consumer and service businesses.
Doosan said in its regulatory filing the contract with RP Energy —valued at 952.3 billion Korean won or about $891 million—was canceled because “the NTP (notice to proceed) for this project was not issued until Dec. 31, 2017, due to delayed tariff approval for the project by the Philippine Energy Regulatory Commission.”
According to the Korean firm, Doosan Heavy and RP Energy were “in negotiations for the resumption of the project” despite the latter having served notice of the contract’s termination.
When asked for comment, RP Energy declined to give any, citing the sensitive nature of ongoing talks with the Doosan group.
First announced in October 2016, the engineering, procurement and construction contract covered two 300-megawatt generators that use CFB (circulating fluidized bed) technology.
RP Energy is a partnership among Meralco, Aboitiz Power Corp., and Taiwan Cogeneration Corp. through their respective subsidiaries Meralco PowerGen Corp., Therma Power Inc. and Taiwan Cogeneration International Corp.
On Feb. 26, Meralco president and chief executive Oscar S. Reyes reiterated that a power supply agreement (PSA) between RP Energy and the distribution giant—covering 225 MW of the Redondo facility’s 300-MW Unit 1 —was submitted for action at the ERC in April 2016.
Reyes said public hearings, a technical working group review and assessment of the PSA, the tariff and other related processes were “essentially completed at the end of April 2017.”
RP Energy has also signed with Aboitiz Energy Solutions Inc. a separate PSA for the Redondo Unit 1’s remaining 75 MW of capacity.
The RP Energy PSAs were among several PSAs that involved Meralco and were still pending with the ERC, which has recently just emerged from paralysis caused by an order from the Office of the Ombudsman for the suspension of four ERC commissioners. The Court of Appeals issued last February a 60-day temporary restraining order against the Ombudsman’s decision.
“Their (PSAs’) approval with urgency is needed, even as the passage of time since their filing in 2016 has already caused significant increases in the (EPC) costs and financing costs of these new power plants,” Reyes said.
“These PSAs are required to be in place by their target commercial operations date to ensure adequate, efficient and reliable power supply and to thereby avert the risk of power outages that will be damaging to the economy, businesses and industries, and households,” he added.