Meralco to put up 300-MW coal-fired power plant

Manila Electric Co., the country’s biggest power distributor, said it planned to put up a 300-megawatt coal-fired power plant in an area north of Manila.

This is the second project being eyed for the $2.3-billion, 1,500-megawatt power generation portfolio that Meralco is planning to build. The first, which was announced earlier, is the 150-MW Liquefied Natural Gas (LNG)-fired plant in Laguna.

Meralco will likely start the construction of the coal-fired power generation plant this year. It is targeted for completion in 2014.

In a briefing following the company’s stockholders’ meeting on Tuesday, Meralco chief operating officer Oscar Reyes said Meralco might be spending about $2 million to produce a megawatt of power from this coal facility. This means the project may cost at least $600 million (roughly P27 billion).

Reyes said the coal project “would likely involve local and regional players.”

“We are still in the process of identifying a strategic partner who should be one who can bring in value to the project,” Reyes said.

In a separate interview, Meralco senior vice president and chief finance officer Betty C. Siy-Yap said about 30 percent of this coal-fired power project would be funded through equity infusion and the rest, through project financing. The equity portion may reach P9 billion, she added.

Meralco, Yap explained, would likely raise the P9 billion in several tranches beginning this year through corporate loans from both local and foreign banks. This planned fund-raising has yet to be approved by the Meralco board.

In the meantime, Meralco president and CEO Manuel V. Pangilinan is optimistic that the distribution utility will post better results or core earnings for 2011 compared with 2010, which was said to be an “exceptional year” due to the elections and the warmer weather during the period.

This optimism was hinged on the expected higher distribution, supply and metering charges, once the increases under the third regulatory period for the performance-based scheme are approved by the government.

Meralco is also implementing measures to help contain costs, Pangilinan added.

For this year, he said Meralco would focus on the strengthening of its core distribution utility business.

“Improving our efficiencies is for us a continuing agenda because of our customers’ growing requirements and enduring need for reliable service,” he said.