PSE approves IPO application of Coal Asia

THE Philippine Stock Exchange (PSE) has approved Coal Asia Holdings’ application for an initial public offering (IPO) listing 800 million shares on the PSE’s first board.

The 800-million shares represent 20 percent of the company’s total issued capital stock and are offered at par value of P1 to attract retail investors to own a stake in Coal Asia.

Recently, Coal Asia, the holder of the country’s second largest coal reserves, received approval from the Securities and Exchange Commission for its planned IPO that aims to raise P726 million net of IPO expenses to bring the Davao Oriental and Zamboanga-Sibugay coal mines into commercial production by 2014 and 2015, respectively.

Coal Asia currently produces high grade coal of less than 100,000 metric tons a year.

By 2014, the production will ramp up to 600,000Mt per year. Net income is projected to reach P500 million by 2014.

Based on the Department of Energy’s 2009 to 2030 Philippine Energy Plan, some 16,550 megawatts of additional power capacity is needed between now and 2030. The country’s installed generating capacity is currently only slightly over 15,000 MW.

Bulk of the capacity is needed by Luzon at 11,900 MW, followed by Mindanao of 2,500 MW and Visayas of 2,150 MW.

In total, there are over 3,000 MW of coal projects in the pipeline that would need a secure source of fuel supply.

Energy Secretary Jose Rene Almendras is pushing for baseload power generation such as coal to address the power deficit in Mindanao, which is heavily dependent on hydro.

Hydro plants’ seasonality has caused widespread power outage in Mindanao during
summer.

According to Almendras, the government would like to promote coal exploration “in the same breadth that we would like to promote geothermal exploration, upstream oil exploration.”

“We are looking for energy supply security, we’re looking for ways in which we are going to have a lot more domestic component to the supply of energy,” Almendras was quoted as saying.

Considering that majority of these expansion and new coal power projects will adopt circulating fluidized bed (CFB) combustion technology that can utilize blended coal, demand for coal is seen to increase tremendously. (PR)