Meralco PowerGen Corp., a unit of electricity retailer Manila Electric Co., may proceed with the construction of a 1,200-megawatt coal-fired power plant in Atimonan, Quezon as a merchant power facility, or without a supply agreement, as a last option to finally to move the project forward.
“It’s been so long and we don’t want Atimonan to fall by the wayside like Redondo,” Meralco PowerGen chairman Manuel Pangilinan said, referring to the stalled power plant of Redondo Peninsula energy Inc.
Meralco PowerGen unit Atimonan One Energy Corp., which is putting up the coal project, signed a power supply agreement with Meralco.
Meralco PowerGen, however, has not proceeded with actual construction pending approval of the supply agreement by the Energy Regulatory Commission.
“We have given green light to management to proceed with Atimonan. At first, the limited notice to proceed, but eventually when they start shoveling around, we will give them a notice to proceed,” Pangilinan said.
“Yeah, why not,” he said when asked if the company is contemplating building the plant on a merchant basis.
A mandate letter for up to P107.5 billion from eight banks has been signed for the loan component of the Atimonan project. The entire project is estimated to cost P150 billion.
When asked about the high project cost for Atimonan without a PSA, Pangilinan said, “it’s only money.”
Meralco PowerGen president Rogelio Singson clarified that building the plant as a merchant facility was the “last option.”
“We will have difficulty in financing more than anything else because the banks want PSA,” Singson said.
He said further delays in project construction would raise the interest cost of the financing for the project. At an interest rate of three percent, the company pays P3 billion annually for the Atimonan plant loan.
Meralco president Oscar Reyes reiterated the Atimonan project went through the entire process needed by the ERC for the PSA. Meralco filed the PSA with the ERC in April 2016.
“It went through the entire process, in all good faith we followed and complied fully with ERC,” Reyes said.
He said the project cost was also affected by the peso devaluation.
“Exchange rate at the time we filed (was) P46-48, now its P53-P54 (to the dollar),” Reyes said.