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Manila Electric Co. (MER), the power retailer that sold its plants to the Philippine government almost four decades ago, will partner with a Japanese utility to build the Southeast Asian nation’s first natural-gas fired power plant in more than 10 years to help reduce outages.
The proposed 1,500-megawatt plant may be built in the southern part of Luzon island with half the project likely to be completed in late 2016, Chief Operating Officer Oscar Reyes said in an interview at his office on May 24. He declined to name the Japanese company because a feasibility study is still being conducted.
“We’re now building our own generation portfolio to contribute to the issue of adequate power and help control prices,” Reyes said.
Running power plants will reduce Manila Electric’s dependence on generators for supply while helping secure electricity in a nation faced with rising demand and intermittent outages. The company, also known as Meralco, distributes electricity in an area accounting for half of the nation’s economic output.
“Foreign investors are taking an interest in the Philippines because there’s a clear need to increase our power capacity,” Alvin Arogo, an analyst at DBP-Daiwa Capital Markets Philippines, said.
Meralco currently buys electricity from First Gen Corp., Aboitiz Power Corp., AES Corp. and San Miguel Corp.
Chubu Electric Power Co., Mitsubishi Corp. and Marubeni Corp. expressed interest in buying power plants from the Philippine government in 2003. A Tokyo Electric Power Co., Marubeni venture in the Philippines operates two power plants, which they plan to expand.
Japanese companies are buying natural gas assets and fields around the world, setting the nation on course to be the first of the 10 largest energy users to bet its future on a less- polluting fuel.
The gas plant complex will comprise four generation units of 375-megawatt each. Two units are scheduled to be completed in late 2016 and the rest at least two years later, Reyes said.
The facility will be in addition to the 600-megawatt coal- fired power plant Meralco is building at the former Subic naval base together with partners. The Philippines’ biggest power plant is the 1,200-megawatt Ilijan gas-fired power plant in Luzon owned by San Miguel.
Meralco’s volume sales may rise 9 percent in the first half after increasing 10 percent in the first quarter on higher consumption in shopping malls, business process outsourcing offices, construction and homes, Reyes said. Sales this year may increase about 5 percent as a “cooler” second half hinders growth, Reyes said.
Meralco shares fell 0.5 percent to 227.80 pesos on Friday. The shares have fallen 11 percent since Jan. 1 compared with the benchmark stock index’s 12 percent advance.
To contact the reporter on this story: Cecilia Yap in Manila at firstname.lastname@example.org
To contact the editor responsible for this story: Colin Keatinge at email@example.comOscar Reyes, chief operating officer of Manila Electric Co. Photographer: Julian Abram Wainwright/Bloomberg