Philippine Companies Build Dedicated Power Plants in Tight Grid Conditions

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The chairman of the Manila Electric Company (Meralco) has said that the Philippines needs more power to support its economic growth. The margin of supply security in Luzon was very tight, and unless oil-fired power plants are fired up, Luzon will experience brown-outs.

Meralco's CEO Oscar Reyes agreed that there would be increasing supply tightness in 2013-16 until new power generation plants were commissioned. The government needed to add 3,000 megawatts (MW) over the next five years, assuming an average economic growth rate of 4.5%.

Meralco will build power plants with a capacity of about 2,900 MW in 2016-19. The company also has entered into long-term bilateral contracts involving 2,880 MW. The new plants will represent 30% of Meralco's power fleet. The power generation sector has been urging the government to ensure sufficient, reliable and competitively priced power in anticipation of increased investments driven by the country's surging economy.

In this tight power scenario, there is a trend emerging for companies to build their own dedicated power plants and sell any power that exceeds their requirements onto the national grid. Philippine Associated Smelting and Refining Corporation (PASAR) is in talks with three companies for a partnership to build a 200-MW power plant in the Visayas region of the Leyte province. Sources say the three possible partner companies are GN Power Limited (Manila), Electricity Generating Public Co. (Thailand) and GDF Suez (Euronext:GSZ) (Paris, France).

Pasar hopes to complete the project by 2016 and aims to lower electricity costs and sell excess power to firms at the Leyte Industrial Development Estate.

The power project will expand Pasar's refining capacity to 1.2 million tons of copper concentrate annually, up from the current 720 million tons.

Universal Robina Corporation will build a 45-MW plant in the Visayas region to be fed by bagasse pulp from the sugar milling process. Total cost of the project is estimated at $60 million, and it is scheduled to come into operation in 2017. The sugar mill has a daily capacity of 10,000 tons of cane, and 30% of this amount ends up as bagasse.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.