MIRANT, METROBANK WILL INVEST $400 M (P22.4 BILLION) IN RP POWER  SECTOR

MANILA, October 1, 2004 (STAR) By Donnabelle L. Gatdula and Marichu A. Villanueva - Mirant Global Philippines Corp., a joint subsidiary of Mirant Philippines Corp. and Global Business Holdings Inc. (GBHI) of the Metrobank Group, will invest some $400 million (P22.4 billion) in the next five years for the expansion program of Toledo Power Plant in Toledo, Cebu and Pagbilao Power Plant in Quezon.

President Arroyo, who was in Cebu City for the turnover ceremony of Mirant Globalís Barangay Electrification Assistance for Countrywide Development (Beacon) project, hailed the power firmís latest investment which is expected to help avert a power supply shortfall in the next few years.

"I just want to express my gratitude to Mirant and Metrobank who have formed a 50-50 partnership to form Mirant Global. I would like to consider this as another huge investment among the many that we are announcing as a sign of investor confidence on our economy," the President said.

Mirant is currently completing its 92-megawatt (MW) power project in Iloilo City worth P1 billion as well as its 17.5 MW power plant project in Aklan worth P600 million.

"They (Mirant) are helping us prepare, to avoid a power shortage in the years to come," the President said.

Mirant Corp. chief executive officer Marcie Fuller said Mirantís new investment reaffirmed the power firmís optimism on the local economy.

"We remain fully confident in the countryís economic outlook under the leadership of President Arroyo," Fuller said.

"Be assured that Mirant is here for the long term, not just to provide the country with reliable and cost efficient energy to support its development needs but as a partner of government in uplifting the overall quality of life of Filipinos through our corporate social responsibility efforts," Fuller said.

For his part, Mirant Philippines president and CEO Ed Bautista said they intend to expand the capacity of 735-megawatt (MW) Pagbilao by 350 MW ($350 million) and 144-MW Toledo by 100 MW ($100 million).

"These expansions which are in an advanced stage of development and subject to our obtaining all the needed clearances, should be operating in early 2008 in time to meet the projected capacity shortfalls in Luzon and Cebu," Bautista said.

The Toledo and Pagbilao expansion projects are the first power projects to be undertaken after the recent Energy Regulatory Commission (ERC)ís decision on the rate increase petition filed by the National Power Corp. (Napocor).

The projects will involve the utilization of state-of-the-art clean coal technology (fluidized bed technology) as well as the latest environmental mitigation measures that will ensure environment friendly operations.

The Pagbilaoís expansion project is the first major power project to be implemented in Luzon in five years.

Energy Secretary Vincent S. Perez welcomed Mirant Globalís planned expansion of two of its existing power generating facilities.

"This announcement helps assure us that we can address the growing electricity requirements in Luzon and the Visayas particularly in the Cebu sub grid," Perez said.

The completion of the additional capacity of the Pagbilao plant is targeted in the first quarter of 2008 while the additional supply from the Toledo plant will come on stream midyear of 2008.

As early as last year, Perez has been calling on the private sector to help construct new power facilities.

"The government is no longer in the business of putting up new power plants as stated in the EPIRA (Electric Power Industry Reform Act) except in emergency situations. Any Government resource for this undertaking will now be channeled to the delivery of other basic services to our people," Perez said.

"Mirant Globalís planned expansion also shows strong confidence of the private sector on the on-going reforms in the power industry,"Perez added.

While several power companies showed keen interest to embark on new power projects, Perez noted that most of them also expressed concerns on the recovery of costs as the present generation rates imposed by the independent power producers are pegged on the charges of Napocor.

Perez said there is a need to start planning for additional capacity due to the long gestation period for power projects. It takes about three to four years to build new power plants.

In the case of Luzon, projections show that Luzon would need additional power supply by 2008.

Perez said power demand in the Visayas, in particular the Cebu area, is seen to reach a critical level unless new power generating capacity is built.

"The Cebu sub-grid needs our immediate attention. Projections show that electricity demand is expected to grow at 5.4" annually given the robust economic activities in the area," he said.

By 2009, additional 100 megawatt (MW) of generating capacity is required and another 100MW by 2010. At present, peak demand in Cebu is already at 447MW but the dependable capacity is only 376MW.

The supply deficit of 71MW is sourced from the Leyte geothermal fields, exported through the Leyte-Cebu interconnection.

"New power plants located in Cebu are needed to increase the stability and reliability of supply in the area and thus decrease its dependence on imported energy from the Leyte geothermal fields," Perez said.

He also pointed out that the planned retirement or decommissioning of two power facilities with a combined capacity of 98.8 MW (55MW Cebu land-based gas turbine and 43.8MW diesel power plant) by 2011 only highlights the need for new capacities.

Mirant Philippines is the largest private producer of electricity in the country. It owns and operates over 2,500 megawatts of generating capacity.


Reported by: Sol Jose Vanzi

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