Meralco fears cost swell on weak peso

By Myrna M. Velasco – October 28, 2018, 10:00 PM
from Manila Bulletin

With swelling exchange rates and the weakening peso, power utility giant Manila Electric Company (Meralco) raised fears that this will trigger unwarranted costs escalation in overall capital outlay for the planned $3 billion Atimonan One Energy coal-fired power project in Quezon.

“Clearly with the rising exchange rates, this delay is something that the project has been suffering on,” Meralco President Oscar S. Reyes has lamented.

He added that the bloated figures on the project’s funding “is one thing that I don’t even want to look at anymore,” apparently indicating that the number had gone higher especially on the engineering, procurement and construction (EPC) contract cost of the proposed facility.

Still, he reckoned that the power plant – given its scale of capacity at 1,200 megawatts would still be the most prudent investment that the country would need to underpin its need for capacity addition especially in the medium- to long-term.

Reyes thus noted, “We deem that it is only fair that having completed the entire process as early as March 2017 and our PSA (power supply agreement) already submitted for decision…we are still hoping and praying because this is a good investment.”

The Atimonan power project is to be concretized by Meralco PowerGen, the power generation investment arm of the utility firm; while its PSA had been underwritten by its parent firm (Meralco).

“We followed all the rules in good faith – other PSAs filed at the same time have already been acted upon … there is no reason why it should not be approved,” Reyes stressed.

The Energy Regulatory Commission (ERC) is relentlessly twitchy rendering decision on the project’s bilateral supply contract given the extent of opposition being thrown against the project.

This should have been Meralco’s trailblazing greenfield power investment – given that most of its existing affiliate-power generation portfolio had just been done through merger and acquisition (M&A) deals. “I think the point is the system needs capacity, this is the most environmentally and most fuel-efficient and reliable project,” Reyes qualified; while he also dispels some concerns raised against the venture.

The propounded facility was recently granted a “certification of energy project of national significance” by the Department of Energy (DOE) but even that is being tormented with assaults by parties opposing the project.