Ty-led power unit eyes putting up 200-MW plants in Luzon

Katherine Visconti

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Tycoon George Ty's power company wants to join the biggest power players of the country in Luzon, where an energy shortage looms

MANILA, Philippines – Tycoon George Ty-led power company, Global Business Power Corp. (GBPC), plans to put up at least 200 megawatts (MW) hydro and coal plants in power-hungry Luzon within the next two to 3 years, according to a top executive.

Right now GBPC operates primarily in Visayas where it is a leading player with a combined total capacity of 633 megawatts of power in the region.

But Luzon is home to the biggest power players in the country — Aboitiz Power, San Miguel’s SMC Global Power Holdings, and the Lopez’s First Gen Corp — and Ty’s power company wants to be one of them.

“We’re looking at a very short horizon between 3 to 5 years. All indications show, based on our study, that the problem in Luzon will happen again in somewhere between 2017 to 2018. There will be not enough supply so you have to prepare to be in that market in that time,” said Jaime T. Azurin Chief Finance Officer for GBPC after an August 16 briefing for its parent company GT Capital Holdings Inc.

“You will see a lot of the big players right now are almost at their capacity limits so there will be a new player coming into Luzon, there will be room for a new player… So we are hoping we will be the one,” he added.

Without additional supply, the threat of a power shortage looms over the region. Energy Secretary Rene Almendras had warned that the shortage could hit as soon as 3 years from now if plans for a proposed 600 power plant are stalled.

GBPC manages a diesel-fired power station in Luzon but it only has 2 generating units of 3.75 MW. Given how costly power infrastructure is, Azurin wants the company to add much more capacity in the region.  “The bigger the better. You know power is economies of scale. We’re looking maybe to start at 200 to 300 (MW) then to grow into that area,” he said.

More renewables to portfolio

The CFO said they are looking at 3 to 4 renewable projects in Visayas and Luzon. He added though that they haven’t ruled out future power investments in Mindanao.

“We have to start small using the renewable but we have big plans of coming into Luzon.”

He said that up to 30% of the 200 to 300 MW they add in Luzon could be hydropower, which is a relatively cheaper form of renewable energy. Still given the cost of water power, a 30% hydropower and 70% coal mix could cost them at least USD$460 million given Azurin’s calculations.

He broke down the capital investment required to invest in hydropower, coal and diesel power plants as follows: “The normal rule of thumb is about $3 million [investment per] megawatt [for hydro]. Coal is about $2 to $2.5 million. [And] $1 million is the rule of thumb for diesel plants. When you go for renewable it is very expensive.”

He added, “We’re looking at hydro because if you look at the rates, it is at par with the coal plants. We have no plans of going to the higher end because it will increase prices… Wind and solar are still high as compared to coal plants.”

Azurin said GBPC could opt for an initial public offering if it is able to increase its roughly 600 megawatts with an additional 300. “50% over what we have will be good enough to say that you can go (for an IPO),” he said.

Companies typically have an IPO as a way to raise money to fund new projects or expansion. “For an IPO you need to have new projects, if you have 200 Megawatts of power that would be time,” he said. He added that the company was “looking at reaching 1,000 (megawatts of capacity) in the next 5 years.”

“[We will have an IPO] Depending on how fast we finish the pre-development [of our planned projects],” he said. – Rappler.com

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