Corporate News

By Victor V. Saulon

SMC plans new power plants, sees profit surge

Posted on May 18, 2016

SAN MIGUEL Corp. (SMC) is planning to build two power plants in Luzon and three in Mindanao, giving the publicly listed conglomerate an additional capacity of 1,200 megawatts (MW) at a total cost of around $4.2 billion, its top official said on Tuesday.

San Miguel Corporation head office in Ortigas district. -- BW FILE PHOTO
“We are doing those projects in Davao to help address the shortage of power in Mindanao,” SMC President Ramon S. Ang said in media briefing after the shareholder meeting of its unit Petron Corp. at the Valle Verde Country Club in Pasig City.

SMC, along with its subsidiaries, is one of the country’s largest conglomerates with sales that translate into about 5.1% of the Philippine gross domestic product last year.

During the briefing, Mr. Ang said that he expects Petron’s net profit this year to be between P15 billion and P18 billion, or nearly three times last year’s P6.3 billion, “driven by a more efficient oil refinery.”

He said that three of the new power plants will be located within industrial estates in Mindanao that SMC is planning to build. He said each estate would take about three years to construct and could be started as soon as negotiations with landowners are finalized.

Aside from having its own plant, each industrial estate will have a pier, he said, adding that local and foreign locators could benefit from the estates’ proximity to ports and low electricity cost. Each of the three estates should be at least 2,000 hectares, he said.

In Luzon, SMC plans to build and operate four 150-MW circulating fluidized bed coal-fired power generating facility in Pagbilao, Quezon. The plant is expected to be operational by 2021.

It will also build four 150-MW circulating fluidized bed coal-fired power generating facility in Mariveles, Bataan for commercial operation in 2020. Power supply agreements have already been closed for these plants with Manila Electric Co.

SMC’s energy business is operated through SMC Global Power Holdings Corp., one of the country’s biggest in terms of installed generation capacity. The subsidiary looks after three power plants -- a coal-fired facility in Sual, Pangasinan; natural gas in Ilijan, Batangas; and hydroelectric in San Roque, Pangasinan. Their combined capacity is placed at 2,545 MW.

In September 2013, SMC Powergen, Inc., a subsidiary of SMC Global, acquired the two 35-MW co-generation solid fuel-fired plant of Petron in Limay, Bataan. The plant added 140 MW to the total capacity of SMC Global.

SMC Global was also the winning concessionaire for the rehabilitation, operations and maintenance of Albay Electric Cooperative in Bicol.

In 2013, San Miguel Consolidated Power Corp. broke ground on the new coal-fired power plant in Malita, Davao and another coal power facility in Limay, Bataan. Both will have an initial capacity of 300 MW each. These power plants are expected to be commercially available by 2016. The power plant in Malita is within an industrial estate.

As of last year, SMC Global was one of the largest power companies in the Philippines, with a 22.2% market share of the total installed power generation capacity for the Luzon power grid and a 16.5% market share of the national grid according to the Energy Regulatory Commission.

Mr. Ang said Petron is also planning to build 12 service stations along the Tarlac-Pangasinan-La Union Expressway (TPLEX) -- or six on each side of the road. He estimated the cost of building a station at P250 million.

He also said SMC is looking at building a steel plant in Mindanao. He did not disclose further details.

On Tuesday, SMC closed up 1.09% at P74. Petron gained 0.52% to P11.56.