San Gabriel project on hold over gas supply issues

An official of the First Gen Corp. on Thursday said the company will resolve first the issues on the gas supply from Malampaya before proceeding with the construction of a 550-megawatt (MW) San Gabriel Power Plant. First Gen vice chairman Peter Garrucho Jr. said officials of the Lopez-owned energy firm "are still in an unsettled phase mainly because we still need some clarity on the gas supply." "As you all know, the gas suppliers have just finished their maintenance program. And now they will probably have more time to look at new business. We hope to reengage in discussions with them early next year on how they will want to sell the additional capacity," he added. Garrucho also underscored the importance of clarifying with the gas suppliers if they would be able to have enough supply for the proposed new gas-fired power plant. "Well, they only have a limited amount of gas that they will like to sell and they have an option. I guess there are people interested in that and so how they will sell that is something we will have to find out," he said. According to Garrucho, in any case, they would need to explore other options for the gas supply. First Gen is expecting to start with the deliberation on the proposed San Gabriel gas-fired power plant by early 2007. First Gen president Federico Lopez said in an earlier interview that they are in the process of evaluating the technical details of the project. "We are still looking at the technical aspect of the project like the location of the power plant," he said. Lopez said the company would continue to keep a timeline that would allow the construction of the plant to be completed by 2010. "We are not in the financial stage yet. But we should start doing it by 2007. We hope to get it done by 2010 or by 2011," he said. The construction of San Gabriel power plant is expected to ease the projected shortfall of power supply in Luzon by 2010. The total project cost for the new power plant is expected to reach $400 million. The DOE is projecting the peak demand for Luzon to grow from 7,343 MW in 2005 to 11,018 MW in 2010 and 14,959 MW in 2014 for an average annual growth rate of 8.2 percent. San Gabriel is expected to be located adjacent to the 1,500 MW San Lorenzo and Sta.Rita power facilities of First Gas Corp. in Batangas. First Gas is a subsidiary of First Gen. Late last year, First Gen was able to obtain the Environment Compliance Certificate from the Department of Environment and Natural Resources for the project. First Gen had also acquired necessary endorsement of the project from the local host communities where the power plant would be located. First Natgas Power Corp. (FNPC), one of the First Gen subsidiaries, is being proposed to operate the San Gabriel project. -GMANews.TV