Power plant to be built by Aboitiz-Metrobank venture with Taiwan firm to serve west Cebu

BY MARITES S. VILLAMOR, BusinessWorld Viasayas Bureau Chief CEBU CITY — The new $400-million power plant that Global Formosa and Abovant Holdings, Inc. will build starting next year will serve the power requirements of industries and retailers in the western part of Cebu by 2010. Erramon I. Aboitiz, Aboitiz Power Corp. president and chief executive officer, said the joint venture will negotiate for power purchase agreements with Atlas Consolidated Mining and Development Corp., West Cebu Industrial Park operator Cebu Industrial Park Developers, Inc. and Cebu Electric Cooperative, among others. Excess power will be traded at the Wholesale Electricity Spot Market, he added. Aboitiz Power signed on Wednesday a shareholders’ agreement with the Garcia-owned Vivant Energy Corp., its partner in distribution utility Visayan Electric Co., Inc., for the creation of Abovant to hold their investments in the new power plant. Aboitiz Power owns 60% of Abovant while Vivant owns 40%. "Abovant was created mainly for the construction of the power plant with Global Formosa. There might be other projects in the future, you can never tell," Mr. Aboitiz said yesterday. He said the consortium will meet within the first week of January to finalize the construction schedule. Definitely, work on the three 82-megawatt coal-fired plants in Toledo City, about 50 kms. west of Cebu City, will start within the first half of 2008. All three units are supposed to be completed before the end of 2010. Global Formosa, a joint venture of Metrobank subsidiary Global Business Power Corp. and Formosa Heavy Industries from Taiwan, signed last month an Engineering, Procurement and Construction contract for the project. Global Formosa will own 56% of the plant while Abovant will hold the remaining 44%. Mr. Aboitiz said the first of the three generating units will be on stream by early 2010. Completion of the second and third units will follow a few months later. "[Cebu’s power situation] will be critical. We’re doing whatever we can. Basically, our game plan is to get this (power plant) constructed by the first half of 2010," he said. Power industry officials earlier warned that Cebu’s power situation will be critical beginning the last quarter of 2008 until the new plant in Toledo comes on stream because of the resumption of Atlas’ operations in mid-2008 as well as the opening of new malls and commercial developments in Cebu. Businessmen wanted the new plant opened by the end of 2009. Demand in the Cebu-Negros-Panay grid has been increasing by an average of 6% a year, said Cebu power core group chairman Carlos G. Co. Supply, on the other hand, has remained the same because there are no new plants. With higher demand from new businesses next year, Mr. Co said Cebu would need at least two power barges to avert outages during peak periods. Aside from Global Formosa and Abovant, only the joint venture of KEPCO Philippines and Salcon Power Corp. is building new generating units. The two 100-megawatt coal-fired plants of KEPCO and Salcon will be completed in 2011.