Steag-Aboitiz to expand power plant capacity

MANILA, Philippines - The stakeholders of Steag State Power Inc. have agreed to expand the capacity of the 232-megawatt coal-fired facility in Misamis Oriental by 150-MW.

In a statement, Aboitiz Power Corp. (APC) said its partners Evonik Steag GmbH of Essen, Germany and La Filipina Uy Gongco Corp. will share in the expenses for the expansion project.

APC controls 34 percent of the power plant while Steag and La Filipina own 51 percent and 15 percent, respectively.

With the planned expansion, APC said it would create a new company to handle the project. The project is expected to be completed by 2013.

APC said since there are already existing facilities in the area, the new project will entail less cost for the group.

“Certain essential facilities, such as the jetty, coal handling facilities and stockyards and the 138-kv interconnection with the Mindanao grid are to be shared with the existing facilities, thereby decreasing project risk and investment.

While Steag sells its offtake to the National Power Corp. (Napocor), the new venture will sell power to other utilities or industries in the form of long-term power sales agreements.

APC said should they receive good response from potential buyers, they may consider putting up more units.

“Depending on the interest the market demonstrates, the agreement contemplates the possibility of another unit,” it said.

APC said it recognizes the importance of providing more power to the Mindanao area.

“Mindanao needs more stable base-load capacity and also needs to diversify its generation sources to be less dependent on hydro. This addition to Steag State Power is the logical way to achieve this,” it said.

The project, APC said, may also provide cheaper power in Mindanao, thus will drive the region’s economic growth.

“This project assures Mindanao of reliable and cost-effective power to fuel its continued economic advancement,” APC president and CEO Erramon I. Aboitiz said.

In the first semester of 2010, Mindanao suffered from a severe generation deficit brought on by low water levels at its hydro plants, which normally provide up to 70 percent of power to the grid. Some areas suffered outages of up to 12 hours per day.

APC is the holding company for the Aboitiz Group’s investments in power generation, distribution, retail and power services. It is a major producer of renewable energy in the country with several hydroelectric and geothermal assets in its generation portfolio.