Japan firms set to put up $700M plant in Quezon

Team Energy, a partnership between Japanese firms Marubeni Corp. and Tokyo Electric and Power Corp., will begin sometime next year the $700-million expansion of the Pagbilao coal-fired power plant in Quezon.

In a briefing Thursday, Team Energy president and CEO Federico E. Puno said the company would finalize before yearend all the details and negotiations for the construction of a facility that could generate another 400 megawatts, to add to the existing capacity of about 700 MW.

Team Energy is set to put up a 50-50 joint-venture company with Aboitiz Power Corp., the independent power producer administrator (IPPA) for the Pagbilao plant, to handle the expansion plans.

According to Puno, they are also currently in talks with another Japanese firm Mitsubishi for the engineering, procurement and construction (EPC) contract. If there is no agreement firmed up within the first half of 2012, Team Energy will bid out the EPC contract to enable them to set up everything they need in time for the planned ground-breaking in the first quarter of next year.

The company hopes to start commercial operations of the new 400-MW plant by 2015.

Puno explained that the new coal facility would be designed to accommodate lower grades of coal, allowing the company to source cheaper fuel from Indonesia and even locally. The existing Pagbilao facility was designed to burn the more expensive coal from Australia.

But he did not elaborate on the funding of the facility, noting that several big banks have already expressed interest in the planned expansion.

Last year, APC and Marubeni Corp. of Japan signed a memorandum of understanding for the expansion, which would add the much-needed capacity for the Luzon grid in three years’ time.

The agreement was signed by APC president and CEO Erramon I. Aboitiz and Marubeni executive managing director and board member Shigeru Yamazoe when President Aquino visited Japan last year. The terms and conditions of the joint investment will be finalized in a definitive agreement.

Meanwhile, the planned 600-MW expansion of the 1,200 MW Sual coal-fired power plant in Pangasinan is still pending because the feasibility study for the project has yet to be completed.

According to Puno, Team Energy and conglomerate San Miguel Corp., the IPPA for the Sual plant, have both agreed in principle on the planned expansion.

But they still need time to conduct the necessary studies and complete all the needed requirements, since the 600-MW unit is targeted for completion by 2016 or 2017.