Gov’t plans to retire 210-MW Mindanao coal power plant
By Alena Mae S. Flores – February 7, 2024, 8:40 pm
from manilastandard.net
The government plans to retire or repurpose the 210-megawatt Mindanao coal-fired power plant in Villanueva, Misamis Oriental, the only remaining government-owned coal plant, by 2026 at a cost of $476 million.
Documents from the Department of Energy (DOE) showed that one option is to include it in the Asian Development Bank energy transition mechanism (ETM).
The other option is “potential bundling with assets needed for the replacement of power with clean energy for promoting energy transition.”
The DOE said detailed discussions with the Power Sector Assets and Liabilities Management Corp. (PSALM) management on the asset are ongoing.
PSALM manages the assets and liabilities previously owned by National Power Corp.
“These discussions involve analyzing different repurposing solutions and considering bundling options with assets related to the replacement of power,” thje DOE said.
The agency said the ADB, together with the Climate Investment Funds – Accelerating Coal Transition (CIF – ACT) investment program, will provide concessional and commercial funds as “stapled” financing to potential bidders to maximize the impact to costs.
Indicative financing will come from ADB at $95 million, CIF debt at $95 million, commercial financing at $285 million and CIF grant at $1 million.
“CIF-ACT cofinancing can help lower the weighted average cost of capital for the transaction, which can generate a net present value gain to offset the economic cost of early retirement of the Mindanao CFPP,” the DOE said.
The Mindanao coal plant was contracted under a build-operate-transfer concession until 2031, after which the asset will transfer to PSALM. The asset still has a remaining operational life of 15 to 20 years.
The DOE said PSALM, the offtaker of CFPP’s power supply, has the option to pre-terminate the BOT as early as 2026, for an agreed termination pay-outs.
Based on DOE’s timeline, the due diligence and project structuring is set to be completed in the first quarter of 2024 followed by preparation of the tender documents and launch of the tender process in the third quarter of 2024.
The commercial close is targeted for the second quarter of 2025, while loan negotiations and final investment consideration is slated for the third quarter 2025.
The ADB approval and financial close is expected by the fourth quarter 2025.
