Philippines: KEPCO-Salcon’s 200MW coal-fired power plant (Naga, Cebu)

In 2008, KEPCO Philippines Holdings (a wholly-owned subsidiary of Korea Electric Power Co or KEPCO) went into joint venture with Salcon Power and formed KEPCO SPC Power Corp (KSPC) to construct and operate a 200MW coal power plant in Naga, Cebu. In June 2008, SPC Power Corp obtained a $100M loan from Korean Export-Import Bank (Korean Eximbank) for the coal-fired project. The Asian Development Bank (ADB) is also set to approve a US$120M loan to KSPC for the construction of the Naga coal-fired plant (“Visayas Base Load Power Project”).

Philippines: Union issues in KEPCO-Salcon Power Corp (Naga, Cebu)

SPC Power Corp (SPC) is owned by the Salcon Consortium, which entered into a 15-year agreement with National Power Corporation (NPC) in March 1994 for the rehabilitation and operation of the 203.8-megawatt Naga Power Complex in Colon, Naga City, Cebu.

KEPCO in Philippines

In June 2004, the Philippines signed a memorandum of understanding with the Korean Government to foster cooperation between two countries in the field of energy, to promote the development and initialization of clean coal technology. When Korea’s state-owned utility KEPCO set its sights from the domestic market to the world electricity market, the Philippines was the first stop with the acquisition of 650MW Malaya Thermal Plant in 1995. After the Malaya project, KEPCO bagged another contract in 1996 for the construction and operation of a 1,271MW Ilijan Gas Combined-Cycle which was the largest private power generation project in the country at the time, and completed in June 2002. KEPCO is now one of the 10 largest corporations in the Philippines, and is responsible for approximately 13% of the country's installed generation capacity. It operates Ilijan plant in Batangas through KEILCO (till 2010), and Malaya plant in Rizal through KEPHILCO (till 2022). In 2007, KEPCO acquired controlling interests in Salcon Power which operates the power plants in the Visayas.

Philippine power privatization 8 years hence

Eight years after the enactment of EPIRA, there has been no effective solution to the problems, old and new, that beset the country’s power industry – e.g., electricity prices continue to soar making the cost of electricity among the highest in Asia; new middlemen, e.g, in guise of IPPAs, will further jack-up prices; NPC/government continues to provide guarantees to new players, e.g., guaranteed markets, fuel subsidies; crippling debt burden; a new era of ‘cross-ownership’ risking ‘sweetheart deals’ among distribution utilities and sister IPPs; ‘uncompetitive market behavior’ in the new electricity market; dismantling of NPC (now down to 20% of the national power grid); increasing exposure of Japanese, Korean, and Chinese state-run utilities in the strategic power sector; shift of power infrastructure financing from public to private sector; violations of trade union rights and unresolved labor issues and that threaten industrial peace and a stable electricity supply. Fundamentally, EPIRA simply transfers the monopoly privileges from the state to ‘unbundled’ interests, both domestic and foreign and not necessarily private, and thus allowing the ‘gains’ to be kept as excess (private) profits and a large percentage plowed overseas, instead of being shared with the consumers and taxpayers through lower electricity rates and a reduced debt burden.

JBIC loan to KEPCO Ilijan Corp (Philippines)

Buyer's Credit for Power Project in Philippines Project Finance for the Private Participation Infrastructure Project (November 10, 2000) -- 1. Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Yasuda) signed today a loan agreement totaling US$255.09 million with KEPCO Ilijan Corporation (KEILCO), incorporated in the Philippines in 1997 with joint equity stake of Korea Electric Power Corporation, Mitsubishi Corporation, Southern Energy Inc., a U.S. corporation, and Kyushu Electric Power Company, Inc. The loan is cofinanced with Bank of Tokyo-Mitsubishi, Ltd., BNP Paribas, Tokyo Branch, Citibank, N.A., Sumitomo Bank, Limited, with JBIC assuming $153.1 million or 60 percent of the total amount. The proceeds of this loan will be applied to the purchase of goods and services from Japan for the natural gas-fired combined-cycle power plant project implemented by KEILCO. The loan is provided on a limited recourse (so-called project finance) basis in which repayment is secured primarily on cashflow from the project. The Japanese exporter and manufacturer are Mitsubishi Corporation and Mitsubishi Heavy Industries, Ltd.

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