KEPCO offers to expand Ilijan plant
Wednesday, August 30, 2006
By MYRNA M. VELASCO
KEPCO Ilijan Corporation, a subsidiary of Korea Electric Power Corporation (Kepco), has put forward an unsolicited proposal to the Power Sector Assets and Liabilities Management (PSALM) for the possible transfer of the supply contract of the shelved 300-megawatt San Pascual for the expansion of the 1,200-MW Ilijan natural gas-fired power project.
It was noted though that everything in the project packaging is still ‘indicative’; and PSALM has not made any commitment on assigning the contract to a third party.
PSALM takes cue from a legal opinion issued by the Department of Justice (DoJ) that the contract is assignable to another interested entity.
Responding to query set forth by the Department of Energy (DoE), the justice department noted that the power purchase agreement (PPA) of San Pascual Cogeneration Company (SPCC), being undertaken by PSALM "can be legally transferred/assigned to a generation project and amended to adopt it for the said purpose."
Should the Korean firm secures the government’s nod on the power supply deal, it noted that it could gear up for 330-MW expansion of the gas-fired facility; from 600 megawatts as originally planned.
Kepco Philippines Corporation president Gil Gu Lee noted that the timing for commercial operation of the proposed capacity expansion should be 2011, because that is the period when capacity shortfalls are expected.
"Even if we start now, it will take another five years - including gestation period, including financial closing, securing ECC (environmental compliance certificate); design for location and construction will take five years), he stressed.
The expansion plan for Ilijan is a follow-through to the memorandum of understanding firmed up last December 2005 between the Philippine Department of Energy (DoE) and Korea’s Ministry of Commerce, Industry and Energy (MOCIE) to enhance their bilateral cooperation in the field of energy.
It was stipulated in that agreement that "the DoE shall coordinate discussions between Kepco and concerned agencies for the use of Malampaya natural gas supply as maybe necessary for Kepco’s natural gas power project and possible utilization of the San Pascual PPA for the capacity expansion of the Ilijan plant subject to compliance with existing laws."
At present, Kepco has been re-evaluating funding for the Ilijan capacity expansion project, noting that the cost of raw materials and equipment have already gone up since the time that the project blueprint was crafted.
The 1,200-megawatt facility has an existing energy conversion agreement (ECA) with the stateowned National Power Corporation (NPC), being the off-taker of its electricity output.
It was built on a 75:25 debt-to-equity ratio and is considered to be seventh cheapest independent power producer for a levelized cost of P2.00 per kilowatt hour (kWh), excluding fuel cost.
posted by philpower @ 12:40 PM,
