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CEBU CITY, Philippines - Four companies have formed a consortium to construct a $450 million coal-fired power plant in Toledo City to address a looming power crisis in Cebu.
The business sector welcomes the plan of the Cebu Power Corp. (CPC) to build and operate a 246-megawatt (MW) power plant in Barangay (village) Sangi, Toledo as it will sustain the business in the province and increase investor confidence.
The consortium officials also assured that the power plant will also use clean coal technology. The CPC is composed of Aboitiz Power Corp. (AP), Formosa Heavy Industries Corp. (FHI), Global Business Power Corp. (Global Power) and Vivant Power Corp. (Vivant).
AP and Vivant formed a joint venture company called Abovant Holdings Inc. AP controls 60 percent of Abovant, while Vivant owns 40 percent.
In August 2007, Abovant signed a memorandum of agreement with Global Formosa ? a joint venture of Global Power and FHI ? to invest in the plant.
Global Formosa, a subsidiary of the Taiwan-based conglomerate Formosa Plastics Group, owns 56 percent of the consortium, while Abovant owns 44 percent.
?Starting this year to 2010, the power situation will be very critical for Cebu. We need more power. This plant answers the looming power crisis in Cebu,? Edecio Antonio Satina, project manager of the Toledo expansion project, said.
He said the 246-MW power plant to be built in Sangi, Toledo City is expected to be fully operational in early 2010.
It will be located beside the existing diesel-fired power plants in Toledo. Groundbreaking is scheduled on January 26.
Satina said the plant will supply power to residential areas, commercial establishments, and industrial zones.
He said a rural household with a single light bulb and no appliances consumes three to five kilowatts (kW) per day while an urban household with appliances such as a television, an air-conditioning unit, refrigerator and washing machine consumes 30 kW per day.
This means that the 246-MW plant is expected to supply electricity to 49,200 to 82,000 single-light bulb rural households or 8, 200 urban households.
The same power plant is also capable of providing electricity to six economic zones, such as the Mactan Economic Processing Zone 1 (MEPZ). MEPZ 1 consumes a maximum 40 MW a day, Satina said.
Satina said the plant is likely to sell power at P4.30 per kW-hour.
Aboitiz said 30 percent of the $450 million would be financed through equity while 70 percent will be from loans.
?We do not have a bank to finance the project yet but there are many banks that have expressed interest in financing the project,? said Global Business president Jess Alcordo, former president of the National Power Corp.
Aboitiz said the plant?s clean coal technology limits the emission of harmful nitrogen oxide and sulfur oxide to environment-friendly levels.
Satina said the plant would use coal from Semirara Island in Antique and Argao town in Cebu.
?Negros coal can also be used. To ensure continuous supply, we will import coal from Indonesia,? he said.
Satina said they have applied for an environmental clearance certificate from the Department of Environment and Natural Resources.
The construction of the plant is seen as a positive development by the business community as this will not only sustain business in the province, but also ensure more investments.
Philippine Chamber of Commerce and Industry regional governor Robert Go said: ?This is a long overdue development. We need more of those power plants for our businesses. It will increase investment and beef up our infrastructure promotion.?
In May 2006, the Visayas was hit by an eight-hour blackout after a magnitude 4.2 earthquake tripped two power plants in Tongonan, Ormoc City in Leyte.
Businesses in Metro Cebu lost about P100 million.
In November 2007, a lightning bolt struck the transmission network from Leyte to Cebu, triggering a two-hour blackout in Cebu.
Satina told a news conference on Tuesday that Cebu has a total demand of 460 MW, but local power producers can only supply 306 MW.
The 306 MW is supplied by Cebu Thermal Power Plants 1 and 2 (105 MW), Cebu Diesel Power Plant 1 (25 MW), Land-based Gas Turbines 1 and 2 (50 MW), Toledo Power Corp. (30 MW), Cebu Private Power Corp. (60 MW) and East Asia Utilities Corp. (36 MW).
Cebu imports around 207 MW from Leyte and Samar.
Global Power?s Alcordo said the new plant?s primary focus would be to meet the demand requirement of Cebu.
?We will still import power from Leyte but slowly, we will go independent,? he said.
Excess power will be sold to Panay and Negros, he said.
According to data from the National Transmission Corporation, at 6 p.m. on October 8, 2007, the Cebu-Negros-Panay (CNP) grid supplied 1,049 MW, but actual system demand reached 1,076 MW creating a 27-MW system shortfall.
Cebu had the highest power demand in the CNP grid.
Satina said that without additional power plants, Cebu will experience more power outages in the coming years.
These will occur when existing power plants are shut to undergo preventive maintenance or scheduled repairs, he said.
Erramon Aboitiz, AP president, said the new facility will give Cebu a more secure power supply since geothermal energy produced by power plants in Leyte is susceptible to earthquakes.
?It is important that during maintenance, we still have the capacity to move power around,? said Aboitiz.
?Our submarine cables (connecting Leyte to Cebu) are also sensitive,? Satina said.
Carlos Co, Cebu Private Power Core Group chairman, said Cebu?s power supply would be critical between 2008 and early 2010 when no new power plants would be in operation.
The two 100-MW coal-fired power plants in Naga to be built by Salcon Power Corp. and Korean Electric Philippines Co. will be finished in 2011.
To address the power problem, Co said the National Power Corp. should bring in two power barges to increase power supply during peak hours.
But Co said this is a temporary solution. /With reports from Correspondent Jun P. Tagalog
