Top power firms keen on Meralco CSP

By Lenie Lectura – October 1, 2020
from Business Mirror

The biggest power producers in the industry, including San Miguel Corp. (SMC), are now evaluating the bid terms released Thursday by the Manila Electric Co. (Meralco) for the 1,800megawatts (MW) Competitive Selection Process (CSP).

SMC President Ramon Ang said in a text message that “SMC will always join any bidding” when asked if the conglomerate will participate in competitive auction.

SMC Global Power Holdings Corp., the power unit of conglomerate SMC, intends to use the capacity of its greenfield power plants to participate in the auction.

SMC Global Power is one of the largest power firms in the country with a total installed capacity of 4,347MW, having a diversified portfolio of power sources such as coal, natural gas and hydro. It currently holds a market share of 25 percent in the Luzon Grid, 8 percent of the Mindanao Grid and 19 percent in the National Grid. The Luzon Grid represents 73 percent of the nationwide demand.

Its greenfield power plants include the 600MW Limay plant and the 300MW Davao plant.

The company has also lined up other major greenfield power plant projects with a combined capacity of 2,135MW. All four are currently being developed. These are the Masinloc units 3 (335MW) and 4 (350MW) 335MW power plants in Zambales, which are targeted for commercial operations in December 2020 and 2024, respectively; 600MW Mariveles power plant, in which half of the capacity will be ready by 2022 and the other half by 2023; the 850MW Ilijan LNG (liquefied natural gas) expansion, with target commercial operation date (COD) in 2023; and the 1,000MWhour Battery Energy Storage System project, which is targeted for substantial completion by next year.

AC Energy, the power arm of Ayala Corp., said it will study the terms of reference. “We will look into it,” said AC Energy president Eric Francia.

AC Energy’s power portfolio registered an attributable capacity of over 1.8 gigawatt (GW) in operation and under construction, spanning projects in the Philippines, Indonesia and Vietnam.

SMC and AC Energy won in September last year the power supply contracts covering 1,200MW of Meralco’s power requirements.

Semirara Mining and Power Corp. (SMPC) said it is also interested. “We would like to bid. We will study the conditions,” said SMPC chairman Isidro Consunji in a text message. The Consunji-led firm earlier offered to participate in the previous competitive auctions set by Meralco.

Aboitiz Power Corp. could also be a prospective bidder. “We are reviewing the terms and conditions as of now. We have expressed in the past our interest to participate and we have assets that can satisfy the needs of Meralco at the time they will need the capacities,” said company President Emmanuel Rubio in an interview.

Aboitiz Power is on track to meet its 2020 target of 4,000MW attributable capacity.

More power firms are expected to participate. “Their qualifications will depend on documents to be submitted by bidders and upon evaluation of the Third-Party Bids and Awards Committee [TPBAC],” Meralco utility economics head Lawrence Fernandez said.

Terms

In the bid invite, Meralco said it would need 1,200MW by December 2024 and 600MW by May 2025.

“Meralco invites all interested and qualified parties to participate in the competitive bidding” which officially started when the bid invite was published.

A bidder can offer at least 150MW.  If the total capacity offer goes beyond 1,800MW, the bidder that fills up the last stack shall have its offer reduced. The price offers must not go over the pre-determined reserve price, which would only be revealed during the opening of the bids scheduled on January 25, 2021.

Meralco prefers baseload plants or those that continuously run on a 24/7 basis. These power facilities should be in commercial operation not earlier than January 2020 but no later than May 2025. The scheduled outage allowance (OA) and forced OA of the plants that will offer to supply Meralco should not exceed 30 days and 15 days, respectively.

The winning bidders will secure a 20-year power supply agreement (PSA) with Meralco.

The PSA could be terminated in the event of default, non-fulfillment of conditions to effective date, non-occurrence of commencement date, certain events of force majeure, expiration of term, upon mutual agreement and change in circumstances.

Interested bidders must submit an “Expression of Interest” until November 12 this year. The bidding process would be declared a failure if there are only two interested firms.

“In order to become an interested bidder and obtain a copy of the bidding documents, payment of a  non-refundable fee of the higher between P1 million and P5,000 multiplied by MW of offered contract  capacity, inclusive of value added tax, must also be made no later than Expression of Interest Deadline,” said Meralco.