Subic power cost seen to drop by 50¢ this year

The cost of power at the Subic Bay Freeport Zone is expected to drop by 50 centavos per kilowatthour (kwh) this year, a top Subic official said.

In an interview, Subic Bay Metropolitan Authority (SBMA) administrator Armand C. Arreza said they are looking to lower the electricity rate to P4 per kwh from the current P4.50 per kwh.

He said this in line with the freeport’s goal to attract more foreign investors as locators cite high power costs as one of the reasons why they hesitate to put up businesses in the area.

Taiwan Cogeneration International Corp. (TCIC) has partnered with the Aboitiz group for the construction of a coal-fired power plant in the Subic Bay Freeport Zone.

“These power projects are crucial to the growth of the Subic Freeport and the local economy because they will help reduce the cost of electricity in Subic, as well as address a projected increase in power demand,” Arreza said.

According to Arreza, the move of the power companies will likewise help the area cope with the expected increase in investment projects in Subic.

“Investors worldwide are looking for investment sites with stable but cheap power supply, along with accessibility and security, investment perks and skilled manpower,” Arreza explained.

He said the recent order of President Arroyo to expand the coverage of Subic’s tax and duty-free regime will increase investment projects.

“You add to this equation the continuing growth of Clark Freeport, the completion of the Subic-Clark-Tarlac Expressway, the full operation of Subic’s new container terminal and the Hanjin shipyard project, and you’d have an exponential growth in power demand here,” Arreza noted.

 He said that with the expected influx of investments, a progressive power program has to be in place.

Redondo Peninsula Energy Inc. the Aboitiz-led joint venture with TCIC, will undertake the $420-million coal-fired power plant.

At the same time, the Subic Enerzone Corp., the operator of the power distribution system in the freeport, will implement a systems installation and rehabilitation project worth P210 million.

Data from Subic Enerzone showed that the power consumption in its Subic franchise area has been increasing over the past few years, with a total of 17.4 million kwh consumed last month.

“This is why we have to upgrade the power system in Subic and put up additional generation facilities on top of Subic’s total output of 130 megawatts, so that we could be more competitive,” Arreza said.

Subic Enerzone Corp., a consortium formed by Aboitiz Equity Ventures, Davao Light & Power Co., Mirant Philippines and San Fernando Electric Light & Power Co., is set to develop new substations, install new field and substation lines, improve switchyards, and install additional circuit breakers and power transformers.

As part of Subic Enerzone’s distribution management services agreement  with the SBMA, the firm upgraded three power substations and other facilitiesin the Subic Freeport this year.  These include a 25-MVA substation at Subic’s Cubi Point area, which was re-energized in October; a 27.5-MVA substation at Maritan Hill, also completed in October to provide reliable electric supply to companies in the nearby Subic Technopark, one of the biggest industrial areas in the Subic Freeport; and another substation at Leyte Wharf.