Philippines' Meralco Moves on 1,200 Megawatts of Projects, Plans 2,700 Megawatts

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Meralco Powergen (MPG), the generation subsidiary of Manila Electric Company (Meralco) (Pasig City, Philippines), is planning to make $2.5 billion in investments to set up at least two coal-fired power projects. Both projects will have a generating capacity of 600 megawatts (MW) and will progress the company's long-term plan to meet the Philippines' electricity needs.

According to Meralco President Oscar S. Reyes, plants of this capacity may cost $1.2 billion to $1.3 billion each, making up a total of about $2.5 billion. He said the estimate was based on a cost of $2 million to $2.5 million per MW for setting up the power plants.

The company's current power project investment portfolio includes MPG's coal-fired plant in Subic, which is awaiting clearance and issue of the environmental compliance certificate (ECC) for the second 300-MW unit at the site.

The two new 600-MW thermal plants will represent less than 50% of the company's planned 2,700 MW in capacity additions that it is targeting through 2021. The coal-fed plants are in MPG's priority development plan, as they are aligned with Meralco's requirement for base-load capacity, reports the Manila Bulletin.

The next round of power investments will focus on the company's aim to integrate liquefied natural gas (LNG) facilities into its power mix. The company has signed deals with Shell Philippines (NYSE:RDS) (The Hague, Netherlands) and Chubu Electric (OTC:CHUEF) (Tokyo, Japan) for parallel studies on the subject. The choice of the eventual partner "will be driven by which company is more robust and which is more competitive," Reyes said. There may be just one partner for the total development--or two, with one working on the second phase after the first is completed.

The proposed LNG power plant would have a total installed capacity of 1,500 MW to make it economically viable and operate so that electricity tariffs to consumers would be affordable, he said. The plant will have four 375-MW units, and it will be developed in two phases of 750 MW each.

The costs for the LNG project are currently being evaluated, with primary concerns being the gas supply and infrastructure, such as regasification terminals. Shell and Chubu Electric are working on feasibility studies to evaluate the viability of LNG facilities for Luzon's power supply.

For more information, see February 28, 2012, article - Philippines Invests $2.2 Billion to Increase Grid Capacity, Power Security.

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