German firm eyes power plant project in Mindanao

Steag Aktiengesellschaft (Steag AG), one of Germany’s largest independent power producers (IPP), will make its entry into the Philippine market by venturing into a 200-MW coal-fired power plant in Mindanao.

Steag is a member of the German conglomerate RAG with interest in mining, power generation, coal, energy services and electronic systems.

In a courtesy call on President Arroyo last Aug. 1 in Malacañang Palace. Dr. Heinz Scholtholt, board member of Steag AG, expressed the company’s interest to invest in this $300 million project in Cagayan de Oro, Misamis Oriental.

His group was accompanied by the local partner, State Investment Trust, Inc. (SITI), one of the country’s pioneer and biggest investment houses led by its chairman Washington Sycip, president, Allen Roxas and executive vice president Augusto Lopez-Dee, Energy Undersecretary Cyrill del Callar was also present. In attendance also for Steag AG were its executive vice president, Claus Peter Bell, and project director Andreas Rubin.

He cited his company’s objective of bringing their comprehensive experience as project developer, investor and operator in every international market it enters to assist in the economic development of such place. While this is Steag AG’s first project, it is also keen in considering the opportunities presented by the power bill and the privatization of the National Power Corp. (Napocor) Scholtholt expressed his trust and confidence in the administration of President Arroyo.

This project was awarded to SITI Consortium together with Harbin Power Engineering Ltd. of China in an international bidding conducted by Napocor as a build-operate-transfer (BOT) project for 25 years. As the first coal-fired power plant in Mindanao, it will diversify Mindanao power sources as the region is currently drawing power mainly from hydroelectric sources, which are susceptible to drought arising from the El Niño phenomenon.

The plant will serve as foundation for future business growth in the region by providing reliable and stable power supply. It will assist in stimulating economic activities such as more investors setting up factories in Mindanao at a period when foreign investors are wary of even investing in other parts of the Philippines due to peace and order concerns. This investment will also provide thousands of job opportunities during the construction stage for businesses that will supply materials and services.

In an interview, Dr. Scholtholt indicated that Steag AG would bring in German expertise and technology to ensure that the plant will conform to world class standards in its technical design and plant management. He also cited that the project is a strategic fit with Steag’s experience in building and operating coal-fired power plants, coal being the preferred fuel for most of its plants in Germany, Europe, North and South America and Asia.

SITI is one of the country’s long-established and largest investment houses. It is involved not only in financial service and real estate development, but also more recently in power project development, and other undertakings.

SITI is part of a family group involved in land, subdivision and condominium development, with more than 30 buildings erected in Makati City alone. In the near future SITI plans to develop a 100-hectare prime property into a prestigious subdivision adjacent to Ayala Alabang Village.