A POWER firm, which is set to build a US$450-million coal-fired power plant in Maasim, Sarangani, said the project will proceed as planned.

Gregorio S. Gonzales, project manager of Conal Holdings Corp., said the 200-megawatt project will have two phases during its construction period.

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"Phase I will include the construction of the first 100-megawatt plant and the common facilities for the whole power station complex," Gonzales explained.

He said: "Phase II, representing the second 100-megawatt capacity, will be started within 18 to 24 months after the commencement of construction of Phase I."

Gonzales added that the power plant is expected to go on-stream commercially by late 2012, at the earliest.

Demand for additional power supply in Mindanao is expected to increase over the next three years.

In a presentation made to the General Santos City Chamber of Commerce and Industry (GSCCCI) and the South Cotabato II Electric Cooperative (Socoteco II) in November last year, Archimedes Flores warned that reserve capacity in Mindanao will fall to 7.5 per cent or 84 MW short of its 212 (MW) requirement in 2010.

Flores is the general manger of Aboitiz Energy Solutions, a sister company of Davao Light and Power Company.

By 2011, Mindanao will likely face a shortage of 174 megawatts (MW) of power supply, according to him.

Transmission Corporation (now the National Grid Corporation of the Philippines-NGCP) said that in 2008, the total dependable capacity in the island is only at 1,510 MW.

Generating plants are, however, required to keep 13 percent of its generating capacity for reserve, straining the reliability of power supply in the island as experienced by long and frequent power interruptions during the last several months.

Flores said the power demand in the island is projected to increase by at least 5.76 percent annually starting next year.

NGCP General Santos City manager Manuel Jamoy said based on the trend in demand growth, the company is projecting a 2,556 megawatt required capacity for the Mindanao grid by 2014 while the Department of Energy (DOE) pegged it at 2,283 megawatts.

In October last year, Energy Secretary Angelo Reyes warned that by this year, electricity demand in the island will "outstrip supply in Mindanao."

The DOE said this year would already be critical for the Mindanao grid with peak demand reaching 1,525 megawatts excluding the additional capacity requirement of 100 megawatts.

For its part, Conal Holdings pegged the growth in power demand at a conservative three percent per annum in the preparation of its expansion plans using 2008 with a peak demand level of 1,288MW as the base year.

At this rate, the actual reserves in the Mindanao grid will likely fall to 60MW in 2014 and to 16MW in 2015 before completely going in deficit in 2016. When reserve capacity goes down to this level, any plant outage in the grid will lead to power outages. Thus, the completion of the second 100MW of the project in late 2014 will just be in time to stave off a regime of rolling brownouts due to a shortage in capacity in the Mindanao Grid.

Conal Holdings Corporation vice president for business development Joseph C. Nocos said whichever statistics are used in projecting the dependable and generating capacities in the island, Mindanao would most likely experience prolonged power interruptions if no new power plants are commissioned by then.

"When forecasting power demand, the relevant period for anticipating power supply demand is five years because it will take at least that long to plan, build and operate a power plant," Nocos said.

He said the 200-megawatt coal-fired power plant they will build will not totally solve the looming power shortage in the island, especially since "none of these projections anticipate the entry of large new industrial loads such as the Hanjin ship building facilities in Tagoloan or the new shopping malls that are coming up in General Santos City," Nocos added.

"But it will help ease the shortfall. What is paramount is for the Socoteco II to have a reliable and cheap source of power supply which our company will provide," he explained.

The South Cotabato II Electric Cooperative (Socoteco II), which services Sarangani Province, General Santos City and the towns of Tupi and Polomolok in South Cotabato presently needs at least 106-megawatt power supply during peak hours. In March, Socoteco II entered into a memorandum of agreement with Conal Holdings Corporation for the purchase of power supply at a lower cost.

Conal Holdings Corporation said consumers of Socoteco II will likely save in power bills once the power plant goes on commercial stream.

"By connecting our power plant directly to Socoteco II, we can immediately cut electricity costs as we will do away with transmission and systems loss charges," Gonzales said in an earlier statement.