Sultan Energy to open new coal-powered plant in South

Sultan Energy to open new coal-powered plant in South

Thursday, August 10th 2006

TO address the growing electricity demand in the region, Filipino-owned Sultan Energy Phils. Corp. has committed itself to build and operate a new minemouth coal-fired power plant in Mindanao that is targeted to be operational by 2011.

Rufino Bomasang, president of Sultan Energy and MG Mining and Energy Corp., on Wednesday announced that the company will spend some $200 million for the construction of a 200-megawatt (MW) minemouth coal plant based on the industry benchmark rate of a million dollar per MW set.

Through the coal resources Sultan’s sister-firm, MG Mining, the plant will use low-ranked coal, mostly sub-bituminous, which is expected to drive down the cost of electricity the plant will produce.

He said the project will incur some $50-million to $100-million additional expenses to mine the plant’s coal requirement. He said the company may opt to tap the capital markets here or abroad to raise more money for the proposed coal plant.

The plant’s output is seen to address the looming shortage in power supply in the Mindanao grid.

The National Power Corp. has estimated that beginning the last quarter of this year, the Mindanao grid may come up short of power supply considering the thinning reserves and by 2009, it will require an additional 57 MW installed capacity to meet the growing demand. Every year until 2014, the grid will require an average increase of 116 MW.

To ease the problem, the German-owned STEAG Philippines is also building a 200 MW in Mindanao.

Bomasang said Sultan Energy is conducting a grid impact system (GIS) study to determine how the plant can connect to the Mindanao grid. The results of the study will be out in three to four weeks. The company has signed a memorandum of understanding with the National Transition Corp. for the connection to the nearest grid. This will initially be funded by Sultan Energy and will eventually be sold to Transco.

”We eventually hope to connect to Transco’s transmission system through a designated location, or cut-in point along the Caraga region power transmission grid for the conveyance of the generated electric power from the power plants,” Bomasang said.

Initially, the plant’s output is targeted to be supplied to Southern Mindanao but once the Leyte-Mindanao interconnection project becomes operational, it can also sell power to the Visayas and Luzon grids.

Sultan Energy is talking with the Aboitiz-owned Davao Light and Power Corp. and the Cagayan Electric Power and Light Co. Inc. for possible off-take deals.

”We are in talks with several private utilities like DLPC and Cepalco but once there is a connection, [Leyte-Mindanao], we can also connect to the Visayas and Luzon,” Bomasang.

The proposed minemouth coal plant is expected to start operations in 2011.

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