Corporate News

Concepcion phase 2 plant to cost P11-12 billion

Posted on July 22, 2016

PALM Concepcion Power Corp. (PCPC) expects to spend between P11 billion and P12 billion for its next 135-megawatt (MW) coal-fired power plant project in Concepcion, Iloilo as the first 135-MW unit starts commercial operation by the end of this month, a company official said on Thursday.

Roel Z. Castro, PCPC president and chief executive officer, said in an interview that the first phase of the two-unit power plant would start delivering electricity either on July 28 or July 29, or around three years after it started construction.

“The [cost of the] first project is between P13-P14 billion,” he said on the sidelines of the 4th Annual Philippines Power and Electricity conference at the Solaire Resorts and Casino in Pasay City.

He said the lower cost for the second unit was due to common facilities already being built such as the control house, jetty and the administration building, as well as transmission facilities.

As in the first unit, financing will come 70% from loans and 30% from internally generated funds, he said, adding that factors that were present in 2013 such as easier sourcing of funds may not be available at this time.

PCPC is a joint venture of Palm Thermal Consolidated Holdings Corp. and Jin Navitas Resource, Inc.

“I think it would still balance out,” he said. “At that time the cost of money was cheaper... but the lenders were looking at us as risky as project proponents.”

He said the perceived risk during the company’s first project had gone down “because of the [company’s] capability in project execution.”

Construction of the second unit will depend on factors such as the rules issued by the Energy Regulatory Commission (ERC), he said.

“The regulatory environment is a bit not clear... because of the new policies that were put out by the ERC like the competitive selection process. It affects us as a generator and also the electric cooperative as a target customer,” he said.

PCPC had signed up 10 distribution utilities and electric cooperatives as customers, which in turn supply electricity to industrial, commercial and residential consumers.

“Given a few months that should be clarified. Apparently there is no IRR [implementing rules and regulations] yet,” he added.

In April, PCPC said the Concepcion-Barotac 138-kilovolt (kV) transmission line and the new 138 kV gas-insulated substation in Concepcion had been energized. During that month, the expansion of the Barotac Viejo substation was also completed.

The completion of the transmission facilities came after the early settlement of right-of-way issues relating to the transmission lines.

Mr. Castro said the transmission assets will be turned over to the National Grid Corporation of the Philippines as those affected by the construction had been compensated and the required documents had been in place.

PCPC’s power plant was later set to be synchronized with the Visayas grid ahead of reliability tests before the company starts delivering power to customers in Panay, Negros and the rest of the Visayas.

PCPC’s investor, Palm Thermal, is a subsidiary of A Brown Co., Inc., a listed company engaged in real estate and agribusiness that has ventured into the utilities and energy industry in recent years. -- Victor V. Saulon