SMC to bid for Leyte power plant contracts

MANILA, Philippines – Diversifying conglomerate San Miguel Corp. will compete for the right to manage the supply contracts of the 640-megawatt Unified Leyte geothermal facilities in Tongonan, a top company official said.

“We will bid,” San Miguel president and chief operating officer Ramon S. Ang said when asked by reporters whether his group is interested in the Leyte power plants.

Ang said the move will be in line with the group’s strategy to ramp up its power portfolio which now includes the 620-megawatt Limay combined cycle plant in Bataan, the 1,200-MW Sual coal-fired power plant in Pangasinan, the 345-MW San Roque multi-purpose hydro in Pangasinan and the 1,294-MW Ilijan natural gas facility in Batangas.

The Leyte facilities consist of the 125-MW Upper Mahiao plant, the 232-MW Malitbog plant, the 180-MW Mahanagdong plant and the 51-MW optimization plants. They form part of the government’s asset privatization program managed by the Power Sector Assets and Liabilities Management Corp. (PSALM), the agency primarily mandated to dispose of power-related assets to repay debts incurred by the National Power Corp. (Napocor).

The winning bidder will effectively become an independent power producer administrator (IPPA), which will manage Napocor’s contracted capacity with the Energy Development Corp.-run geothermal power facilities.

IPPAs are qualified independent entities that administer, conserve and manage the contracted energy output of Napocor’s IPP contracts, including selling the energy production and/or offering ancillary services.

Among those that earlier expressed interest to bid for the Leyte plants are publicly Pacifica Inc., controlled by the Romero family of Harbour Center and power generation giant Aboitiz Power Corp.

Electric cooperatives, however, are batting for the deferment of the sale, scheduled on July 30, alleging that the government’s bidding process is flawed and that it could lead to higher power rates.

In a span of less than two years, San Miguel, through unit San Miguel Energy Corp. (SMEC), has become one of the biggest power producers in the country with its string of acquisitions.

San Miguel continues to be on the lookout for new investment opportunities in the power generation sector, particularly those that can provide clean energy, Ang said.

In addition, San Miguel is eyeing more coal mining projects in Mindanao to add to the recently acquired rich coal deposits in Sultan Kudarat and South Cotabato.

Coal remains the cheapest transition fuel and is preferred over imported coal as buyers can save on shipping costs, import duties and value-added tax payments. Electricity from coal plants cost P2 per kilowatt-hour less compared with other sources like natural gas-fed plants.