SMC to build power plant in Cebu, Panay

CONGLOMERATE San Miguel Corp. is planning to build two coal-fired power plants in the Visayas worth about $1.2 billion, the company confirmed in a disclosure to the Philippine Stock Exchange.

The company said that it plans to construct through SMC Global Power Holdings Corp. plants each costing $600 million with a capacity of at least 300 mega watts.

The company also announced that the construction of the 600-MW coal-fired power plant in Limay, Bataan and the 300-MW power plant in Malita, Davao del Sur are expected to be completed by 2016.

Meanwhile, SMC has welcomed the Competitive Selection Process (CSP), which backs the lowest offer price for electric cooperatives and distribution utilities (DUs) by avoiding bilateral agreements.

”Then good, everyone can join in biddings... We’ll bid on everything -- if there’s some who wants to buy power -- we’ll join,” SMC president and chief operating officer Ramon Ang told reporters.

The president also mentioned SMC has already proven it offers competitive prices, noting it has set a benchmark in the power industry after signing an agreement with the Central Luzon Electric Cooperatives Association (CLECA) to supply 300 megawatts (MWs) at P3.20 per kilowatt hour (kWh) for 20 years.

”This will be the benchmark now. Eeveryone that will sell electricity, even for Meralco the Energy Regulatory Commission (ERC), will insist on P3.20 per kWh,” he said.

Ang noted CLECA, which comprises Aurora, Nueva Ecija, Pampanga, Tarlac and Zambales, used to purchase its electricity for P8 to P9 per kWh.

He added that the lower electricity prices will also encourage investments in the areas.

Ang said SMC will source the capacity from its near operational 300-MW Limay power plant in Bataan, which is under its subsidiary SMC Global Power Holdings Corp.

He further bared that many distribution utilities in Visayas and Mindanao approached SMC and made inquires after its P3.20 per kWh deal with CLECA, adding it is far from the prevailing rate in Mindanao at P8-P9 per kWh.

CSP impacts the offered rates for electricity consumers through the aggregated capacity biddings, by bulking the many DUs demands and approving the lowest offers.

Through CSP, the market for generation companies is contained, while lowering the offered bidding prices, since if the company loses on a bid it has no other choice but to sell through the Wholesale Electricity Spot Market (WESM), where there is greater risk of not being called to provide power.