Salcon Power, Kephilco team up for 200-MW Cebu power plant

Salcon Power Corp. (SPC) and Kepco Philippines Corp. (Kephilco) have formed a joint venture company that oversees the construction of the 200-megawatt (MW) Naga power plant in Cebu.

In a disclosure to the Philippine Stock Exchange, SPC said the new corporate vehicle will handle the construction, commissioning, owning, operation and management of the coal-run power facility. 

SPC added that its board has formally approved the participation of the company in the coal power project of Kephilco. 

SPC said the company will invest 40 percent in the project while 60 percent of the total capitalization of the project will be provided by Kephilco.

SPC and Kephilco have joined forces to build the coal facility which will utilize circulating fluidized bed combustor boiler, a clean form of coal technology.

The coal plant, which will provide power in the Visayas area, is estimated to cost $416.5 million. Thirty percent of the financing cost will be shouldered by Kephilco ($75 million) and Salcon ($50 million). The remaining 70 percent of the project cost shall be financed through loans. 

The group and the National Power Corp. (Napocor) entered in November 2006 a joint sales agreement wherein Napocor will market the electricity to be generated from the new Naga coal plant and secure commitments from the distribution utilities for the supply of such electricity.

It is forecast that power supply conditions in the Visayas area will reach a critical level as early as 2008.

 “The new Naga coal power plant will greatly alleviate a supply shortage by providing much needed stable and adequate supply of electricity,” the group said.

Some banks led by Korea Development Bank and Korea Export-Import Bank are likely to provide bulk of the financing requirements to the consortium for the coal facility.