Atimonan project costs rise by P15B due to PSA approval delay
MERALCO Powergen Corp. (MGen) said the continuing delay in the approval of the power supply contract for its Atimonan coal-fired power plant had jacked up the project’s cost by P15 billion
MERALCO Powergen Corp. (MGen) said the continuing delay in the approval of the power supply contract for its Atimonan coalfired power plant had jacked up the project’s cost by P15 billion.
“If my numbers are correct, I think nasa mga (it’s at about) P15 billion, kasi interest rate na lang (because even only the interest) on a loan of P107 [billion],” Rogelio L. Singson, MGen president and chief executive officer, told reporters last week.
He said the reckoning of the cost is from the filing of the power supply agreement (PSA) in 2016 until September or October this year.
Mr. Singson said even a 2% per annum increase in interest rate would result in raising the borrowing cost for the project.
“Tapos meron ka pang (Then you also have) escalation on EPC (engineering, procurement and construction),” he said, referring to the contract with the builder of the facility.
The EPC contract had to be revalued after it lapsed because of the delay. A new contract meant costs will go up under new terms.
Mr. Singson also cited foreign exchange costs, which rose with the weakening of the peso against the dollar.
Angelito U. Lantin, Manila Electric Co. (Meralco) senior vice-president, previously said all of the equipment for the project will be imported. He said when the power supply contract was submitted for approval, a dollar costs only about P47. The peso closed at P52.71 to the dollar on Dec. 7.
About a year ago, Manila Electric Co. (Meralco) said its unit MGen had agreed with lenders the terms of a P107.5-billion loan to fund about 70%-75% of its 1,200-megawatt (MW) coal-fired power plant in Atimonan.
MGen is borrowing from eight local banks in Philippine pesos. The company previously placed the project’s cost at P135 billion.
Although there was a lending agreement, MGen unit Atimonan One Energy, Inc. (A1E) could not draw down on the loan amount until the PSA has been approved. The supply contract is pending with the Energy Regulatory Commission (ERC).
Oppositors to the project questioned the timing of filing of the PSA just before rules on competitive selection process (CSP) took effect. The CSP allows challengers to the electricity price forged under the PSA. A case questioning the contract had been filed and is pending at the Supreme Court. The ERC previously said it would await the court’s decision before acting on the PSA.
“I think we will wait for the approval,” said Meralco President and Chief Executive Officer Oscar S. Reyes when asked whether the group would opt to build the plant even without an assured buyer of its power output.
“May oras pa ’yun (There is still time),” he added.
MGen is leading the development of three power plants — all coal-fired. A1E is building a twounit ultra supercritical coal-fired power plant, each with a capacity of 600 MW in Atimonan.
Another subsidiary, San Buenaventura Power Ltd. Co. (SBPL), is constructing a 455-MW facility in Mauban, Quezon. It will be the country’s first supercritical coal-fired power plant. The plant was targeted to be completed in mid-2019.