GN Power forges coal supply deal for Bataan plant

GN Power Co. Ltd. has forged a supply agreement with three local coal suppliers for its planned 600-megawatt clean coal facility in Mariveles, Bataan. 

Documents submitted to the Energy Regulatory Commission (ERC) show that GN Power will use low rank coal that has relatively low energy content and cheaper than the high grade coal. The company’s $822-million coal plant was designed to use low grade coal.

GN Power, a partnership between Power Partners Ltd. Co. and funding manager PMR Holding Corp., said the procurement process for its coal supply commenced with invitations to prospective coal suppliers from the Philippines and Indonesia. 

According to GN Power, bidders were provided a bid package consisting of, among others, a model or draft long-term coal supply agreement for low rank coal, which has low calorific value, a similar agreement for middle rank coal and the suggested form of letter for the bid price.

Newly-built or soon-to-be-built coal-fired power plants are now designed to run on low rank coal.

To be more cost-efficient, some coal power plants are using a blending scheme which allows them to mix local coal with that of imported coal.

MG Mining and Energy Corp. vice chairman Rufino Bomasang earlier said new coal power plants have utilized technologies that can use low rank Philippine coal, a move seen to revitalize the country’s largely untapped coal resources.

Estimates show that the country’s coal resources have the potential of producing up to 2,000 megawatts of power which would entail investments of as much as $2 billion over a 25-year period.

Bomasang said since the coal shortages in 2003, local coal users have successfully increased their utilization of local coal with little, or no retrofitting in their respective plants. 

There are currently no existing coal mines sufficient to fuel major coal-fired power plants other than Semirara Mining Corp., which produces about three million tons a year.

Bomasang noted that aside from the Semirara coal reserves, there are proven and indicated coal resources large enough to supply major power plants for at least 25 years.

He said these coal reserves are in Isabela, Cagayan, Surigao del Sur, South Cotabato  and Zamboanga-Sibugay. 

According to Bomasang, there are several other coal deposits in Cebu, Masbate, Catanduanes, Batan Island, Negros Occidental and Samar, but are generally in difficult geological condition.

He noted that coal reserves in the Cotabato basin, the newest frontier area in coal with a potential coal reserve as big as Semirara on the basis of surface indications, have yet to be fully explored at depth. 

Sultan Energy Philippines Corp., wherein Bomasang is also the vice chairman, is  the largest concession holder in the area and has recently resumed drilling and is substantially expanding its exploration activities.

Bomasang said coal mining concern such as open pit mining and coal combustion can be substantially minimized, if not totally eliminated, with the use of modern technology.