Stock News 2012: DMCI unit to build Palawan power plant

Photo of a coal-fired power plant in Shuozhou, Shanxi, China Français: Centrale au charbon, Shuozhou, Shanxi (Chine) (Photo credit: Wikipedia)
Three new coal-fired power plants will be built in Palawan to cater to growing demand in the province, a company official said.

“DMCI Power was announced yesterday as the winning bidder for the 25-megawatt (MW) power plant of Palawan Electric Cooperative (PALECO),” the company said in a disclosure.

The power firm submitted the lowest bid, with true cost generation rate at P9.38 per kilowatt-hour, it added.

“Required capacity is 25 MW by September next year. We will put up the diesel-fueled power plant in Palawan,” DMCI Power president Nestor Davidas said in a phone interview.

Davidas said the company prefers coal-fired power plants but Palawan is already in need of additional power supply.

Early this month, the Puerto Princesa city council declared a state of emergency given power outages in the province.

DMCI Power, for its part, will build coal-fired power plants in Palawan due to high operating costs of the diesel plant.

Davidas said DMCI Power will start commercial operations of a 15-MW coal plant in October 2014. Another 15-MW power plant will start producing electricity in 2017.

Davidas said the company is also looking for a third 15-MW facility that will use the “circulating fluidized bed” technology that is more environment friendly.

The Consunjis earlier announced their plan to put up 7.5-MW coal-fired power plant in the Small Power Utilities Group (SPUG) areas.

State-run National Power Corp.’s unit SPUG is mandated by the Electric Power Industry Reform Act of 2001 to undertake the electrification of remote villages or areas not connected to the main transmission grid in Luzon, Visayas and Mindanao.

There are 14 areas under SPUG including Catanduanes, Romblon, Siquijor, Sulu, Tawi-Tawi and Basilan that are under review prior to privatization.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=828874

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Stock News 2012: ERC okays SMC unit's supply deals

Provincial seal of Nueva Ecija, Philippines. (Photo credit: Wikipedia)
The Energy Regulatory Commission (ERC) has approved five new energy supply contracts of a subsidiary of diversified conglomerate San Miguel Corp.

San Miguel Energy Corp. (SMEC) bagged deals for its Sual coal-fired thermal power plant in Pangasinan to supply electricity to electric cooperatives in Nueva Vizcaya, Ilocos Norte, Laguna, Bataan and Nueva Ecija.

“In the interest of the public, there is a necessity for the immediate and provisional approval of the instant applications in order that there will be no undue disruption in the power supply,” the ERC said.

It will also ensure that member-consumers of the electric cooperatives benefit from “lower generation cost as can be gleamed from SMEC’s proposal,” it added.

The supply contracts range from one year and five months to two years and four months.

Specifically, Nueva Ecija II-Area 1 Electric Cooperative Inc. will buy 10-12 million kilowatt-hours (kWh) per month from SMEC at P1.66-6.42 per kWh.

Nueva Vizcaya Electric Cooperative Inc. will source roughly 16,000 to 21,000 kWh from SMEC at P1.66-6.32 per kWh.

SMEC will supply 15-17 million kWh worth P1.66-6.32 per kWh to Ilocos Norte Electric Cooperative Inc. SMEC said the rates will be lower by 20 centavos compared with the previous supply contract with state-owned National Power Corp.

Peninsula Electric Cooperative Inc. will buy 21-28 million kWh of electricity from SMEC at P1.76-6.70 per kWh.

Lastly, First Laguna Electric Cooperative Inc. will source five to seven million kWh valued at P1.82-6.70 per kWh.

The ERC said consumers are also expected to benefit as the ERC required the distribution utilities to pass on 50 percent of the efficiency discount availed from SMEC.

http://www.philstar.com/Article.aspx?articleId=827897&publicationSubCategoryId=66

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Stock News 2012: Napocor, PSALM get ratings upgrade

Standard & Poor’s (S&P) has upgraded the credit rating of two state-run power firms to just a notch below investment grade.

The higher ratings for the National Power Corp. (Napocor) and the Power Sector Assets and Liabilities Management Corp. (PSALM) followed after an upgrade in the Philippines’ sovereign credit score.

“These rating actions come after we raised the foreign currency sovereign credit rating on the Republic of Philippines,” S&P said in a statement.

Specifically, ratings for foreign currency, local currency and senior unsecured debts of Napocor and PSALM were raised to BB+ from BB. The credit outlooks were changed to stable from positive.

“We consider the credit profiles of PSALM and Napocor to be weak and heavily dependent on the support of the Philippine government,” said S&P credit analyst Rajiv Vishwanathan.

However, Vishwanathan said “both utilities are almost certain to receive timely and sufficient extraordinary support from the Philippine government in the event of financial distress.”

To date, Napocor has transferred to PSALM more than 99 percent of its rated US dollar bonds, including the $300 million due in 2028 and $160 million due in 2016.

Outstanding rated bonds of Napocor amount to $452,000 due in 2028 and $133,000 that will mature in 2016 as most debts were shouldered by PSALM.

S&P said PSALM and Napocor play a critical role in implementing government reforms in the power sector and providing electricity to far-flung areas.

The firms also stand to benefit from government control over key budgetary and strategic decisions, S&P added.

“The Philippine government also provides an irrevocable, unconditional and timely guarantee on all debt obligations of PSALM and Napocor,” S&P said.

PSALM is the state agency created by the Electric Power Industry Reform Act of 2001 to privatize government power assets as well as manage power plants and debts of Napocor. It buys the fuel requirements of state-owned power plants.

http://www.philstar.com/Article.aspx?articleId=825111&publicationSubCategoryId=66

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Stock News 2012: DMCI Power eyes off-grid Napocor areas

Can you identify these buildings? (Photo credit: nina_theevilone)
DMCI Power Corp., the power generation unit of the Consunji Group, is eyeing to participate in the privatization of the National Power Corp.’s Small Power Utilities Group (SPUG) this year, a company official said.

DMCI Power chairman Isidro Consunji said the company intends to help in energizing the SPUG areas.

“Our focus this year is on [Napocor] SPUG areas. We will bid as much as possible,” he said.

Napocor is targeting to intensify its privatization efforts starting the first quarter of this year, with the two areas being eyed for privatization to include parts of Mindoro and Palawan.

Napocor-SPUG is mandated by the Electric Power Industry Reform Act to provide electricity to remote islands and far-flung, inland barangays that are not connected to any of the main grids, after around 90 percent of its generating assets have been privatized.

The competitive selection process for Napocor-SPUG’s off-grid areas is part of the major reforms in the power sector.

It provides an opportunity for private investors to build, own and operate generation facilities to supply missionary or far-flung areas.

Earlier, Napocor president Froilan Tampinco said they would offer to power generation investors the remaining 12 SPUG areas.

There were 14 SPUG areas previously offered for private sector participation: Occidental Mindoro, Oriental Mindoro, Marinduque, mainland Palawan, Catanduanes, Bantayan, Masbate, Tablas, Romblon, Camotes, Siquijor, Tawi-Tawi, Basilan and Sulu.

Tampinco said they would also privatize the SPUG areas in Catanduanes, Romblon, Tablas and Siquijor after the Palawan and Mindoro bidding.

But the Napocor executive admitted that they would have to put the least priority to “more difficult areas” such as Sulu, Tawi-Tawi and Basilan.

http://www.philstar.com/Article.aspx?articleId=764301&publicationSubCategoryId=66