PNOC-EC eyes partnerships with Koreans for coal plants

At least six South Korean power firms, including giants like Korea Electric Power Corp., have separately expressed interest to partner with PNOC Exploration Corp. to put up two coal-fired power plants worth $400 million, or roughly P17 billion.

In a briefing on Thursday, PNOC-EC chief of staff Silvestre Punsalan III said these companies made their intentions known to them during a recent trip to South Korea. PNOC-EC was interested in partnering with South Korean power companies primarily because of their technology, he explained.

Punsalan, however, declined to reveal the identities of the other Korean firms, as talks were still preliminary.

PNOC-EC, the upstream oil and coal arm of state-run Philippine National Oil Co., plans to build a 100-megawatt minemouth coal-fired power plant in Zamboanga Sibugay and a similar 100-MW coal facility in Isabela. The target is for these two power plants to start commercial operations by 2016.

According to Punsalan, PNOC-EC is targeting to have a minority share in each project of up to 49 percent but not lower than 30 percent. The remaining stake will be held by its prospective partner, which should be a power generation company.

“We hope to identify our joint venture partner within the second quarter next year,” he added.

For now, PNOC-EC is in the process of selecting a transaction adviser, which will help the company in selecting its joint-venture partners and in crafting the agreements, among others. The identity of the adviser, which can either be a local or foreign entity, will be announced on September 11.

The proposed mine-mouth coal facilities, which will be constructed near PNOC-EC’s coal mines, are expected to help boost the business climate and generate the much-needed employment in the underserved provinces of Isabela and Zamboanga Sibugay.

At present, PNOC-EC is developing three new prospective, high-grade coal mines within Zamboanga Sibugay under Coal Operating Contract No. 41, which covers Lumbog, Lower Butong and Sta. Barbara. This will allow the company to increase its coal production by 800,000 metric tons yearly. Current production under COC 41 is about 150,000 MT.

PNOC-EC chairman and CEO Gemiliano Lopez Jr. earlier said the three mines were expected to start commercial production between 2012 and 2015, starting off with the Lumbog area, which was estimated to have coal reserve of at least 1.4 million tons.