SMC unit, Petron tie up for Luzon power plant

MANILA, Philippines - San Miguel Energy Corp. (SMEC) and oil giant Petron Corp. are forming a joint venture company (JVC) that will build a power plant in Central Luzon.

In a disclosure to the Philippine Stock Exchange, Petron said its executive committee approved yesterday management’s proposal to invest in a JVC to be formed with SMEC for the purpose of putting up and operating a solid-fired power plant in Limay, Bataan.

Petron did not disclose other details like how much capital it would inject.

SMEC earlier bagged the right to operate the 620-megawatt Limay combined cycle plant in a bidding last year. Commissioned in 1993, the Limay power plant in Bataan approximately 145 kilometers west of Manila, is designed to meet the base-load demand of the Luzon grid.

According to the Power Sector Assets and Liabilities Management Corp. (PSALM), SMEC “exceeded the government’s reserve price for the plant” after it offered $13.5 million for the Bataan-based plant. The successful negotiated sale was PSALM’s fourth attempt to privatize the Limay plant.

Limay is the only power generation business that would be consolidated into San Miguel’s books this year.

Petron itself is building a power plant in Bataan that will feed the power supply needs of its nearby refining capacity.

SMEC is the power administrator for the 1,000-MW coal-fired Sual coal-fired power plant. It also recently took over the 1,200-MW Ilijan gas plant and also acquired earlier this year 100 percent of the outstanding capital stock of Daguma Agro Minerals Inc., a coal mining firm situated on a 2,000-hectare property located in South Cotabato.

The power facility remained unsold after public bidding in July 2008 and January 2009 and negotiations held in March 2009, primarily due to lack of interest from investors.