ABB, Mitsubishi to upgrade Batangas power facility

BATANGAS -- Batangas Co-Generation Corp. (BCC), the first co-generation company located within an industrial park, has entered into a verbal agreement with a consortium composed of Asea Brown Boveri (ABB) and Mitsubishi Heavy Industries Inc. for the upgrading of its power generation facilities. The written contract is expected to be signed within the month.

Estimated project cost is $50 million to $60 million.

The agreement was preceded by a downsizing of BCC's original capacity from 65-megawatts (MW) to 35-MW. The move was viewed as a step back to prepare for an anticipated surge in locators in the First Philippine Industrial Park (FPIP).

"We have downsized the capacity, but Batangas Co-Generation has entered into a verbal agreement which will result into developing a capacity to generate not only 35-MW of power, but also 20-tons per hour of steam, and 5,000-tons of refrigerated or chilled water," said Ernesto B. Pantangco, First Private Power Corp. (FPPC) executive vice president. Majority of FPIP's locators are semi-conductor and electronics firms which require not only power supply but also clean chilled water and steam.

FPPC is a subsidiary of First Philippine Holdings Corp. (FPHC), which counts among its subsidiaries the Manila Electric Co. (Meralco), FPIP, and First Gas Power Corp. (FGPC). BCC is 100 percent-owned by FPPC.

Pantangco explained that the downsizing is temporary as there has been low demand. But the economy is expected to rebound resulting in more locators, which FPIP has been luring.

He added that FPPC has been talking with locators as well as operators of industrial parks and ecozones of the economic viability of utilizing the co-generation system instead of generating their own capacities. The industrial park in Batangas is already 30 percent occupied while several locators have already signified their interest to set-up site at the FPIP.

The plant will be commissioned by October next year, while full commercial operations will be realized by the end of the 2001.

Meanwhile, the BCC will be entering into a power purchase agreement (PPA) with the spin-off firm under Meralco, which will be responsible for distributing energy within the industrial park.

Pantangco said the PPA is unique in that Meralco guarantees to assist in the debt servicing of the project costs for the next 12 years even if it still is basically a take-or-pay type agreement common among power generators and utilities companies.

Loan agreements between financial institutions and BCC/Meralco are expected to be finalized this month, he added.

In another development, the Lopez Group took exception to published reports that they are supporting a move to oust Federico Puno as Napocor president.

Speaking for the energy related businesses of the Lopez Group, Federico Lopez, vice president of First Philippine Holdings and First Gas Corp., lauded the high professionalism of Puno. At the same time, the Lopez executive denied the group is backing anybody as replacement for Puno.

"We have the highest respect for Freddie Puno as we welcome the straightforward and transparent way he conducts business. We do not always have the same opinion on issues, but our discussions have always been on a high level, issues oriented and constructive," Lopez said.

Lopez also said he and the rest of the Lopez Group look forward to continuing its current working relationship with Mr. Puno and Napocor in the years to come.