US-based AES Corp., through its local subsidiary Masinloc Power Partners Corp. (MPPC), has put up an energy marketing arm.
MPPC, which won the auction for the Masinloc coal power facility for $930 million, has formed AES Philippines Energy Supply Business (APESB) to market the generation output of the Zambales-based plant.
AES, a leading global power developer and operator listed on the New York Stock Exchange, has 13 regulated utilities and 121 generation facilities, with a total generation capacity of around 43,000 megawatts (MW).
Specifically, APESB will market the power output of the 600-mw Masinloc plant through bilateral contracts with customers like distribution utilities, special economic zones, electric cooperatives, large commercial and industrial customers and the spot market.
The new company will also handle sales and marketing, asset optimization risk management and billing.
The firm will have a team that would oversee all activities related to the sales and marketing of Masinloc’s dispatch.
The asset optimization team will carry out trading, scheduling, fuel procurement and contract structuring.
Moreso, the new marketing arm will procure the coal requirement of the Masinloc coal plant.
Aside from marketing functions, APESB will coordinate with AES’ global fuel procurement teams when negotiating with global coal suppliers in order to achieve competitive rates.
The Masinloc power plant is one of the independent power producers (IPPs) of the state-run National Power Corp. (Napocor).
Under the procurement law of the government, Napocor sources the coal requirement of the Masinloc plant from Australia and China.
However, AES said certain costs can be saved by making coal supply practices conform to AES’ global norms.
MPPC is wholly-owned by AES Corp. The International Finance Corp. (IFC), the private sector investment arm of the World Bank, is reportedly eyeing to buy at least a six percent stake in MPPC.
AES allegedly intends to dispose of its 25 to 30 percent stake in MPPC to a local partner.
It would be noted that IFC also approved a financing package of up to $275 million to AES to partly fund its acquistion of the Masinloc plant.The financing is not entirely a loan to AES. Since a portion is considered IFC’s equity investment in the power plant.
The total project cost for the Masinloc facility is estimated at $1.1 billion, which includes the acquisition price, funding for the debt service reserve account, transaction costs, refurbishment works and initial working capital needs.
AES is already looking at additional investments of another $1 billion to expand the capacity of the Zambales plant by another 600 mw.