Meralco offers to buy entire RP Energy output

Dominant power distributor Manila Electric Co. (Meralco) seeks to obtain the entire output of Redondo Peninsula Energy Inc. (RP Energy), which is building a $1.28-billion 600-megawatt coal-fired power plant in Subic Bay Freeport Zone, Zambales.

Wholly-owned subsidiaries of Meralco, AboitizPower through Therma Power Inc., and Taiwan Cogeneration Corp. (TCC) through Taiwan Cogeneration International Corp. signed a shareholders’ agreement last Friday which formalized the entry of Meralco subsidiary Meralco PowerGen Corp. (MPGC) into RP Energy.

RP Energy earlier had said it expected to sell part of the output to Meralco although it will have to be negotiated by the parties and approved by the Energy Regulatory Commission.

Meralco COO Oscar Reyes said the company is willing to purchase the entire 600 MW but he aknowledged that some industries at the Freeport may need the additional power. “We should be able to accommodate the entire 600 MW but it is a function of at what price,” Reyes said.

Meralco PowerGen becomes the controlling shareholder of RP Energy with 50 percent plus two shares while Therma Power and Taiwan Cogeneration hold the remaining shares in equal proportion.

Therma Power president Erramon Aboitiz said the consortium has chosen to use circulating fluidized bed boilers, a clean coal technology to reduce the impact to the environment. “Our goal was clear: to provide locators world-class supply of electricity that was competitively priced that was competitively priced to allow them to expand and grow,” he said, adding that they want to offer it with the least possible adverse effect on the environment.

The project uses two single high-efficiency 300 MW units in lieu of two 150 MW units, for a total net generating capacity of 600 MW.

Reyes said the two 300-MW power facility in Subic will again play a strategic role in helping meet eight percent of the entire Luzon Grid’s power needs.

The project will employ a skilled workforce of 120 when operational, through 30 percent equity and 70 percent financing. The first unit is expected to come on-stream in 2014 when the proponents expect the Luzon grid to be in need of new base load generation capacity.

Meanwhile, at the sidelines of the event, Energy Secretary Jose Rene Almendras said the Malampaya gas-to-power consortium will sign an agreement next month to proceed with the second and third phase of the Malampaya project northwest Palawan, estimated to cost $1.5 billion. “The design contract has been finalized, and it will be signed in August. We need to form an inter agency to get all the permits and all the approvals and I’m already asking PNOC EC to get ready with their share of investment,” he said.

PNOC EC has a 10-percent stake in the Malampaya project while Shell Philippines Exploration B.V. and Chevron Malampaya LLC each hold a 45-percent stake.

The $4.5-billion Malampaya project provides more than 30 percent of the power requirements of the Luzon grid. The project provides natural gas to fuel three natural gas plants with a total capacity of 2,700 MW.

The second phase is expected to be completed in the next four years while construction is expected to start the expansion programs by early next year. The Malampaya gas field is expected to produce until 2024. For the third phase, Almendras said it may cost about $500 million but there is no definite timeframe for it as exploration is critical and they have to test the condition. –Danessa O. Rivera, Daily Tribune