Thai energy firm mulls expansion in Phl

MANILA, Philippines - The local unit of Thailand’s Electricity Generating Public Co. Ltd. (EGCO) is looking at expanding its power portfolio in the Philippines due to growing electricity demand.

Specifically, subsidiary Quezon Power (Philippines) Ltd. Co. (QPPL) is in talks with Manila Electric Co. (Meralco) and the Ayala conglomerate for potential partnerships.

The Thai firm has an ongoing negotiation with Meralco to expand an existing 460-megawatt (MW) coal-fired power plant in Quezon province, a company executive said.

“Our main target is Meralco. They have really been a great partner of QPPL as an offtaker so logically we are looking at them first,” QPPL managing director Frank Thiel told reporters.

Meralco, the country’s largest power distributor, buys the electricity output of QPPL’s power plant to secure its needs for the power distribution business.

EGCO, which holds a 98-percent stake in QPPL, earlier announced its plan to put up another 500-MW unit.

Commercial operations of the 460-MW coal-fired power plant started in 2000.

In the potential expansion, Thiel said QPPL is willing to give Meralco a majority stake.

Thiel said the company hopes to sign an agreement with Meralco within the year. It will be followed by an offtake agreement.

The second unit of the coal plant will take three years to build, allowing it to start commercial operations in 2016 or 2017.

Meralco, through unit Meralco Powergen Corp., is looking at putting up several power plants with a total installed power generation capacity of 2,500 MW from now until 2020.

Thiel said QPPL ideally wants a 100-percent offtake agreement but it will be comfortable with 60-70 percent, which will encourage banks to finance the project.

The required capital for the expansion has yet to be finalized as QPPL still has to find an engineering, procurement and construction firm and sign fuel contracts.

“We are sourcing currently in Indonesia and they said they will be happy to extend the contracts for the second unit,” Thiel said.

EGCO started buying into QPPL four years ago. Early this year, the company spent $375 million to purchase an additional 45.875 percent share in QPPL.

Meanwhile, QPPL is also in talks for potential partnerships with the Ayala conglomerate, Thiel said.

The conglomerate, through AC Energy Holdings Inc., targets hitting a generating capacity of 1,000 MW in the next five years that will require as much as $2.5 billion in investments.

“As a developer, we have to go knocking on doors trying to find the right partner,” Thiel said.

“EGCO’s desire is to expand its presence in the Philippines. We can do hydropower, coal and even gas,” Thiel said.

QPPL, which is open to building 80-500 MW power plants, is also looking at acquisitions.

“We think the power sector in the Philippines is booming...we see the demand keeps increasing and we see potential need for additional capacity,” Thiel said.

The Luzon grid needs another power plant, at least another 600 MW power plant by 2016 to prevent outages and price spikes, data from the energy department show.