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    Southeast Asia
     May 3, 2005
Salcon, Kepco to invest in Cebu coal plants

CEBU CITY - Two power producers will invest US$270 million to construct two 100-megawatt (MW) coal-fired power plants that are expected to augment power supply in the Philippine province of Cebu by 2008.

Reinerio Lastimoso, Salcon Power Corp vice president for group power operation, said Salcon and Korean Electric Philippines Co (Kephilco) will put up a coal power plant project that will use the circulating fluidized-bed combustion (CFBC) technology.

Lastimoso said of the $270 million, 60% will be invested by Kephilco while 40% will come from Salcon.

Aside from addressing Cebu's power supply shortage, the coal-fired power plant will help revive the domestic coal mining industry, he noted.

"According to the Coal Miners Association, there will be about 10,000 more jobs in the country's coal mining industry once the coal-fired power plants operate," Lastimoso said.

Kephilco, an independent power producer operating the 650MW Malaya Power Complex in Rizal province on a rehabilitation-operation-maintenance-and management basis with the National Power Corp (Napocor), is a wholly owned subsidiary of Korean power generation and distribution company Korea Electric Power Corp (Kepco).

Salcon, on the other hand, is 53.7% owned by Salcon Philippines Inc, a Philippine subsidiary of Salcon Ltd of Singapore. It has a 15-year contract with Napocor to rehabilitate, operate and manage Napocor's power plant in Cebu.

Lastimoso said the two 100MW CFBC power plants, which will be located on a reclaimed area right across from the Naga power plant, will adopt proven environment-compliant technology. There are now about 500 operating CFBC units around the world.

He said the coal-fired power plants using the CFBC technology will have reasonable operational and maintenance costs because they will accept even medium-quality coal, unlike the existing coal-fired power plant in Salcon, which accepts only high-quality coal.

Salcon president Antonio Corpuz urged coal miners in the country, especially in Cebu, to begin developing their mining operations so they can supply the coal needs of the two power plants by 2008.

He said once fully operational, the two power plants will need about 3,000 metric tons of coal per day.

"Right now, the supply of coal in Cebu cannot meet the demand. Because of the shortage in supply, the prices of coal in Cebu are high compared with the prices of imported coal and the coal from Panay," Corpuz said.

Panay is the biggest supplier of coal in the country, he said.

Corpuz said Salcon is now urging coal miners in Cebu - those from Dalaguete, Argao and Uling, Naga, to group together, improve their operations, and sell their products as a group to Salcon.

"We are encouraging them to sell coal at reasonable and competitive rates. The cost per metric ton of coal today is high. The people of Cebu will suffer if this will continue," he said.

Late last year, members of the Philippine Chamber of Coal Mines Inc and the Cebu Coal Alliance Cooperative expressed support for the construction of the two coal-fired power plants in Naga, saying it would revive the local coal industry.

There are only three mining companies left in Cebu. Some 24 mining firms shut down when the importation of cheap Indonesian coal by local cement and electric plants years back caused the price of coal to drop.

(Asia Pulse/PNA)



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