MERALCO POWERGEN Corp. (MGen) will decide within the first half of the year if it will convert its planned 600-megawatt (MW) coal power plant in Subic, Zambales into a gas-fired facility, as the project hit delays in permitting and site stability, its top official said.
“We should be making a decision within the first half of this year regarding what to do next. But in the meantime, we’re saying let this rainy season pass by and see the stability of the site kasi (because) the stability of the site is another challenge,” Rogelio L. Singson, MGen president and chief executive officer, told reporters last week.
A unit of power distribution utility Manila Electric Co. (Meralco), MGen is developing the plant, which has two units, each with an identical capacity of 300 MW. It will be under Redondo Peninsula Energy, Inc. (RP Energy), which it leads with a 47% stake, along with the Aboitiz group’s Therma Power, Inc. with 25%, and Taiwan Cogeneration International Corp. with 25%.
When the plant developer announced the signing of construction and supply contracts in the fourth quarter of 2016, it had expected the power plant to go online by mid-2020 on Sitio Naglatore, Cawag, Subic Bay Freeport Zone.
The construction contract was signed with Azul Torre Construction, Inc. while the supply contract was with Doosan Heavy Industries & Construction Co. Ltd.
Based on data from the Department of Energy (DoE) at that time, the project will cost P1.2 billion or around P50 billion. Meralco had planned to source 225 MW of its baseload requirements from RP Energy.
Mr. Singson said RP Energy remains without an approved power supply agreement (PSA) from the Energy Regulatory Commission.
“Unfortunately, the negotiations with the Korean EPC (engineering, procurement and construction) contractor — Doosan — gave us a one-year extension, which ended in 2017 because the plant was supposed to have started 2016. But since we could not get a PSA, it was extended for another year — end of December,” he said.
“So by end of December, we had to talk to them again and they said: ‘we could no longer hold the prices’ — foreign exchange has changed significantly, interest rates have changed, and escalation prices and so on,” he added.
Mr. Singson said without a PSA, the company had no recourse but to hold off the project.
“We will now open our options not just with the Korean contractor but in fact, we’re now looking at other options. It might be new technology. It might no longer be CFB (circulating fluidized bed) because if I’m to be asked, I would only settle for ultra-supercritical [plant],” he said, referring to the plant’s efficiency that leads to lower emissions.
“Second, we’re also considering puwede ba (whether it’s possible to convert it to) LNG (liquified natural gas),” he said.
“We’re in that stage. So our shareholders — Aboitiz, us and [Taiwan Cogeneration] — are on hold position until we complete our technical assessment of what technology and when,” he said.
In the meantime, Mr. Singson said the company would assess the stability of the site, which he said remains to be valuable because it has an adjacent transmission connection, a ready environmental compliance certificate, and an approval from the Subic Bay Metropolitan Authority. — Victor V. Saulon
