SMC firms up sale of Limay power plant

MANILA, Philippines - San Miguel Corp. (SMC) has firmed up the sale of its 620-megawatt (MW) Limay diesel-fired power plant to Millenium Holdings Inc. (MHI), a company report showed.

The sale of the power plant was made through subsidiary SMC Global Power Holdings Corp., it noted.

SMC Global approved the sale of its 100-percent stake in PanAsia Energy Holdings Inc. (which owns the Limay plant) and later signed the share purchase agreement with MHI.

“Completion of the sale is subject to certain conditions, including obtaining the relevant corporate and government approvals, such as the Board of Investments,” SMC said in an earlier report to the Philippine Stock Exchange.

PanAsia has assets worth about P4.35-billion (including cash and cash equivalents, trade and other receivables, inventories, current assets, property and equipment, among others) as against liabilities of around P1.23 billion.

On the other hand, MHI is a local group led by businessman Mike Valencia.

Industry sources said PanAsia, meanwhile, will continue trading the output of Limay at the Wholesale Electricity Spot Market (WESM).

The Limay power plant comprises two 310-MW modules, Blocks A and B, which consist of three 70-MW gas turbines and a 100-MW steam turbine, respectively. San Miguel Energy Corp., the conglomerate’s energy arm, acquired the Limay plant from the government for $13.5 million in 2009.

SMC initially wanted to convert the Limay plant to a natural-gas fired power plant but decided against it. The Limay plant was utilized as “must run” unit during the summer months of 2010 when the national grid, especially the Mindanao grid, suffered a severe power shortage due to the El Niño weather phenomenom.

SMC president Ramon Ang said the company feels it would be more viable to build greenfield or entirely new power plants.

It would be noted that SMC Global Power is preparing its initial public offering (IPO) to raise funds to finance the construction of coal power plants which include two 150-MW coal-fired power plants in Ternate, Cavite and a 150-MW coal station in Northern Leyte.

The company intends to complete the construction of the power plants by the first quarter of 2015.

SMC Global is planning to build power projects in Bulacan and Davao for completion by 2016.

It also intends to participate in the bidding of government’s power assets including the Naga power plant complex and the Unified Leyte geothermal power plant.

The SMC Group, which is now the country’s largest privately-owned power generation firm, is planning to double its existing capacity to 6,000 MW from 3,000 MW.