STEAG mulls to expand operations

STEAG State Power Inc., operators of the 232-megawatt (MW) coal-fired power plant in Mindanao, is now studying and evaluating their options on the proposed expansion plans.

“The shareholders of STEAG State Power Inc. are presently exploring possibilities of capacity expansion in the light of increasing power demand in Mindanao,” Jerome Solvedilla, Steag corporate communications officer, told reporters.

Soldevilla said the operators of the coal plant are considering to expand the plant by another 100MW to 200MW.

The Aboitiz Group has 34 percent in STEAG while Evonik Steag GmbH, Germany’s fifth largest power generator, controls 51 percent and La Filipina Uygongco Corp. holds the remaining 15 percent.

Soldevilla admitted that the consortium are now weighing their options since STEAG constructed the coal plant under a build-operate-transfer (BOT) scheme with 25-year power purchase agreement with state-owned National Power Corp. (Napocor).

“They are evaluating the proper scheme for the planned expansion. Hopefully the decision will be out within the year,” Soldevilla said.

Erramon Aboitiz, president and CEO of Aboitiz Power Corp., said earlier that the plant's expansion "is something we continue to look at."

The Mindanao coal plant is located at the PHIVIDEC Industrial Estate in Misamis Oriental, Northern Mindanao.

Aside from the concerns on the BOT, Abotiz said another factor in the expansion plans is the rates since many distribution companies are reluctant to sign contracts with them because of the rates differences.

Napocor rates in Mindanao are P2.30 per kilowatt hour (kWh) while STEAG sell their power at P4.50 per kWh in order to recover their investment from expansion.

“But the problem if they don't sign up, they might have shortage of power. It's the same thing that happened with Cebu. Now they have brownouts and the cost of power is more expensive,” Aboitiz said.

With no contracts to seal, Aboitiz said they would rather defer the expansion plans unless they secure commitments from DUs. “So we have to wait until we get at least 50 to 60 percent of plant capacity,”

Aboitiz Power bought its 35 percent stake in the Mindanao coal project for US$ 91.9 million in 2007.

Based on the power monitoring conducted by the National Grid Corp of the Philippines (NGCP) Mindanao grid is still suffering from rotating brownouts due to the El Nino forcing hydro plants to shutdown because of low water level from the reservoirs.

The government also placed Mindanao in the state of emergency in order to address the power crisis in the region. (MSN/Sunnex)