Pinoy businessmen to reopen Batangas steel plant

MANILA, Philippines - A group of Filipino businessmen is set to re-commission a mothballed steel plant in Batangas, although the scheduled reopening is now being pushed back by the reported refusal of the Batangas II Electric Cooperative (Batalec II) to supply power to the facility.

Alejo S. Tatel, president of Golden Era Steel Mill Inc. (GESMI), said rehabilitation of the steel plant in Mabini, Batangas has been completed as early as January and they are ready to hire up to 220 people to get the facility running.

GESMI took over the plant from PL Batangas Steel Corp., which was forced to shut down both its steel mill and smelting shop  in September 2012 after Batalec II cut the power supply to its 69-KV dedicated distribution line due to arrears amounting to P296 million per Batalec II computation representing unpaid bills and interest.

PL Batangas, which was funded by a group of Taiwanese and Filipino businessmen, previously employed over 400 individuals.  Daily operations were managed by 27 Taiwanese expatriates, most of them reportedly carrying tourist visas only.

Tatel said GESMI, PL Batangas and Batalec  have already agreed on a tri-partite deal for the restructuring of the arrears in a two-year period beginning with a P30-million partial payment. GESMI also offered to give an advance payment of P5 million for the fresh supply of power to the facility.

Batalec II has already committed to resume supply of power to the plant in mid-January through the dedicated line although this did not happen. Construction of the dedicated line cost P113 million, P69 million of which was shouldered by PL with the condition that it will be reimbursed by Batalec II. Up to now, the P69 million has not been returned to PL.

PL Batangas also complained of overcharging to the tune of P105 million. Batalec II, in previous negotiations, already agreed to slice P30 million from the P296 million as it admitted committing some cases of overcharging.

Tatel said aside from reneging from its commitment to resume the provision of power to the plant in mid-January, Batalec II also offered GESMI an exorbitant rate of about P8 per kilowatt-hour, way above the P5.216 per kwh being charged by the Batangas I Electric Cooperative (Batalec I) to the large industrial users in its franchise area.

“We asked Batalec II to provide power at least to the steel rolling mill so we can start running the plant and provide employment to the residents of Batangas. But Batalec II management has been uncooperative and even gave us uncompetitive rates,” Tatel said.

The Federation of Philippine Industries (FPI) has asked the Energy Regulatory Commission (ERC) and the National Electrification Administration (NEA) to step into the matter as the continued resistance of Batalec II to provide power to GESMI runs counter to the Aquino Administration’s program to induce investments that will strengthen the country’s industrial sector, particularly the steel industry.

“The management of Batalec II should not only look after their income but also their corporate social responsibility. The project of GESMI will not only give Batalec II P50 million in monthly revenues but also spur economic activity in the Batangas area and create employment. We hope Batalec II will adhere to the principle of ‘employment today, income tomorrow.’ If it is necessary for us to beg Batalec II for the sake of the country, we will gladly do so,” FPI Chairman Jesus L. Arranza said.

GESMI intends to increase the capacity of the steel rolling mill to 160,000 tons per year from its current 120,000-ton capacity.