(STAR) By Donnabelle L. Gatdula - President Arroyo and Energy Secretary Raphael Lotilla will lead today the inauguration of a 210-megawatt (MW) Mindanao coal power plant at the Phividec Industrial State in Misamis Oriental.

Lotilla commended STEAG State Power Inc. and its partner State Investment Trust Inc. for completing the project ahead of the January 2007 schedule. He noted that the coal plant went on full commercial operation as early as November 2006.

"The entry of this Mindanao coal-fired power plant is one of the crucial means in addressing the challenge of attaining stability in the supply of electricity in Mindanao. In fact, its full commercial operation during the last quarter of 2006 has contributed significantly in the reliability of power supply in the Mindanao grid," President Arroyo said.

The President also invited STEAG to consider expanding the capacity of the plant to meet future demand in Mindanao or to build entirely new capacity in Southern Mindanao.

The power project generated a total investment of about $305 million, one of the biggest foreign direct investments in Mindanao region. The plant is operated by SPI, a joint venture between STEAG AG of Germany, which holds an 89-percent stake, and local partner, SITI, one of the countryís pioneer and leading investment houses.

As a result of the early completion of the project, the Mindanao gridís system reserve margin has increased from a critical of 13.2 percent prior to the entry of Mindanao coal to 24.6 percent in November 2006. The required reserve margin for Mindanao is 21 percent.

The energy chief also noted that the project has contributed about 16 percent of the power generation mix in Mindanao which resulted in less utilization of oil-based plants in Mindanao from 26-32 percent to 13 percent. Hydro accounts for 61 percent while other renewable energy sources such as geothermal accounts for 11 percent.

"Apart from its contribution in increasing the available power generation capacity in Mindanao, the community and local government unit hosting the power plant will likewise benefit from the project particularly through electrification projects, development and livelihood projects and reforestation, watershed management and environment enhancement, as part of the benefits to host communities," Lotilla said.

Lotilla believes that this project will help spur economic activities in this side of the country.

"The inauguration of this 210-MW Mindanao coal-fired power plant is a crucial energy infrastructure project for economic growth in Mindanao and we expect to have an upbeat business environment in the region," he said.

Lotilla took note of the plantís use of state of the art technology that will eliminate emissions in the process of power generation.

The power plant is fueled by imported coal. Emissions during the power generation process is controlled in the flu gas by air cleaning equipment like desulfurization to neutralize sulphur, nitrogen dioxide reduction by optimized combustion and fly-ash removals using bag filters.

He said that while Mindanao is dependent on hydro power, it is essential to have diversified sources of energy like this coal-fired power plant project to make power system less vulnerable to supply shocks or intermittency of energy sources like hydro, and lessen the use of the more expensive oil-based power plants.

With the commissioning of this new plant and the transfer of three power barges with a total capacity of 75 MW from the Visayas grid in 2005, the Mindanao grid will now need 850 MW additional capacity for the period 2009 to 2014 to meet the projected 6.4 percent average annual growth in power peak demand.

To meet the projected demand, potential capacity addition to be developed and implemented by merchant power producers include the 8MW Cabulig hydro, 68-MW Tagoloan hydro, 50-MW Mindanao geothermal project, 200-MW Sultan Kudarat and 30-MW Minergy expansion project.

The National Power Corp. is likewise pursuing the rehabilitation of the Agus Pulangui hydro plants to bring them back to their full potential. The Pulangui IV desiltation project is expected to be completed by May 2007.

This would result in a longer operational period of Pulangui hydro plants at 225 MW with estimated additional energy of 45-60 GWh.

The Balo-i flood control project is expected to be completed by December 2008. This would result in an additional 60-MW capacity for Agus II.

Chief News Editor: Sol Jose Vanzi

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