ADB lends $120 million to Cebu power plant

MANILA, Philippines - The Asian Development Bank (ADB) has approved the grant of a $120-million loan for the construction of a major power plant in the Visayas.

The 12-year loan was extended to Kepco SPC Power Corp. (KSPC), a joint venture between Korea Electric Power Corp. and SPC Power Corp. The loan will go to the construction of a 200-megawatt (MW) coal-fired power plant in Naga City, Cebu.

Coal-based generation is the most practical option in Cebu since the further use of geothermal resources – already providing 70 percent of power in the Visayas – cannot provide enough immediate, reliable and low-cost power.

The new 200-MW power plant will use circulating fluidized bed combustion boilers, the best technology available for plants of this size. This is in line with ADB’s energy policy of helping Asia secure adequate power supply while promoting cleaner power generation.

The first 100-MW unit will come on line in February 2011 and the next 100-MW unit in May 2011. KSPC will sell power from the plant primarily to electricity cooperatives on Cebu and Negros islands, and to the proposed wholesale electricity spot market in the Visayas.

The Manila-based financial institution said many parts of the Visayas region are economically promising but poor. Under-investment in power generation, which has led demand to outstrip supply, threatens to hold back further development in the region. Intermittent blackouts on the islands of Cebu, Panay, and Negros are set to become more frequent until more power is made available.

“A steady supply of power will help develop the local economy, creating jobs in manufacturing, tourism and other sectors that will boost incomes for local families in the region. At the same time, a reliable power supply will allow hospitals, schools, and other public services to fully function,” said Joe Yamagata, deputy director general in ADB’s Private Sector Operations Department.

He added that the project would help promote a competitive market for electricity and provide a model for future private-sector investment in power generation, including renewable energy. These goals support the government’s efforts to reform the power sector.

Earlier,the World Bank and the ADB endorsed a $250-million fund to support the Philippines’ various initiatives to mitigate global climate change.