Kepco eyes 40% of Salcon Power

Korean Electric Power Corp. (Kepco), the biggest Korean investor in the country’s power sector, plans to acquire as much as 40 percent of Salcon Power Corp. (SPC), a publicly-listed power generation firm controlled by a Singaporean industrial conglomerate.

In a disclosure to the Philippine Stock Exchange, SPC said Kepco, through local subsidiary Kepco Philippines Corp. (Kephilco), will invest in the company either through the purchase of shares from existing shareholders, the subscription to a new issue of shares, or the purchase of treasury shares.

SPC operates the Naga power plant complex in Cebu which bid out by the National Power Corp. in 1994. With its primary business objective of increasing involvement in power-related projects in the Philippines, it has since entered into joint ventures, acquired equity interests, signed technical services agreements, and vied for similar government contracts, the most noteworthy of which is the Eight Islands diesel project which provided diesel-fired power facilities to eight small islands in Luzon and the Visayas.

SPC is majority owned by Salcon Power Ltd. of Singapore, a diversified conglomerate engaged in the development of power plants, palm oil mills, liquid storage tanks, water treatment plants, and waste water treatment plants.

The group also has investments in companies that are engaged in power generation and distribution, environmental engineering, agro-industrial engineering, and engineering equipment and material sales in Austria, China, Germany, Indonesia, Malaysia, Singapore, and Thailand.

SPC said its board of directors has approved last week a memorandum of understanding with Kephilco under which the latter shall immediately conduct a technical, financial and legal due diligence on the company.

Kephilco is an independent power producer presently operating the 650-megawatt Malaya power complex in the province of Rizal under a rehabilitate-operate-and-maintain (ROMM) agreement with Napocor.

Apart from this, Kephilco is planning to undertake a feasibility study for a 200-megawatt (MW) coal fired power plant in Cebu, located near the Naga complex, with plans to invest up to $250 million for the project.

Kephilco is also proposing to undertake the development of a 100-MW coal fired plant in Iloilo, also in the Visayas.

Kepco, on the other hand, operates the $700-million natural gas project in Ilijan, Batangas with the capacity to supply 1,200 MW of electricity for the Luzon grid.