Marubeni drops bid on $1.4-B Consunji coal-fired power project
By Myrna M.Velasco – Updated May 14, 2019, 11:22 AM
from Manila Bulletin
Japanese firm Marubeni Corp. has formally backed out from its bid to corner a 20 percent stake in the $1.4 billion Saint Raphael coal-fired power project of Semirara Mining and Power Corp. (SMPC) of the Consunji group.
“Marubeni dropped already,” SMPC Chairman and Chief Executive Officer Isidro A. Consunji said, adding that such decision had been aligned with the new investment strategy of the Japanese industrial giant.
“They (Marubeni investing units) were given instruction not to invest in coal plants anymore all over the world,” Consunji explained, relative to the Japanese firm’s exit from the coal-fired power plant project in Batangas.
The proposed 700-megawatt Saint Raphael power facility has been envisaged as a key addition to the coal-fired portfolio of the Consunji group. For that venture, the other prospective major shareholder had been Meralco PowerGen, the power generation investment arm of Manila Electric Company.
However, a major blow had been inflicted on that project last week following the issuance of the decision of the Supreme Court (SC) requiring all power supply agreements (PSA) negotiated from June 30, 2015 to go through a competitive selection process (CSP) or tendering.
The PSA of the Saint Raphael project which was underwritten by Meralco had been among those covered by the SC verdict to undergo bidding – effectively nullifying its power supply deal which was pending at the Energy Regulatory Commission (ERC) since three years ago.
Consunji noted that project preparations and overall implementation has technically stalled because of the unapproved PSA – plus aside from the capacity off-take of the power plant, project sponsors will also need to work on the transmission connection that will eventually underpin the wheeling of the power plant’s capacity.
“We were not able to start anything because it was not only the PSA of the plant that we will need to address, but also the transmission assets that will connect the plant to the grid,” he said.
And with the SC ruling last week, the company will need to face added burden on ensuring capacity off-take or PSA for the eventual generation of the Saint Raphael plant.
Prior to the regulatory and judicial setbacks, the company previously indicated that it was negotiating with American firm Black & Veatch for the project’s engineering, procurement and construction contract. But even that had been impeded for sometime already.
The Consunji group is already a well-entrenched player with coal generating fleets in the country – including its Sem-Calaca coal-fired plant and its Southwest Luzon Power Generation Corp. plants that are all sited in Batangas province.
