The Philippine government is currently discussing with the Asian Development Bank (ADB) the viability of a plan to ‘buy out’ the older fleets of coal-fired power facilities in Mindanao grid.

Finance Secretary Carlos G. Dominguez III, who is also the board chairman of the Power Sector Assets and Liabilities Management Corporation (PSALM), divulged “We’re studying the economics of it and we should be able to come up with a model by sometime in the third quarter of this year.”

He acknowledged that the proposed State acquisition of the coal plants, “will require long term and low-cost funds, so we are working together with the ADB to study the actual viability of this concept.”

Energy Secretary Alfonso G. Cusi indicated they are supportive of the plan, and they have been collaborating with the DOF in prudently evaluating how that can be successfully executed.

The energy chief noted that the figures on prospective loan amount for the recommended purchase of the coal plants are still being firmed up, with him emphasizing that “these are concepts still being studied.”

Dominguez explained that the game plan of the government is to acquire the older coal plants, and place them on shutdown mode once the rehabilitation of the 932-megawatt Agus-Pulangui hydropower complex is completed; and its electricity generation can already be ramped up.

“Together with the Department of Energy, we have developed a plan to, first: improve the generating capacity of the Agus river system, As we do that, we are also studying the possibility of setting up a fund to acquire all the coal-powered plants in Mindanao, with the idea of shutting them down as the energy delivery of the Agus river increases,” the finance chief stressed.

Dominguez further qualified that the idea is for Mindanao to be “totally powered by, or at least 90-percent powered, by renewable energy sources,” with him citing that aside from hydro, there is also high irradiation potential of some areas that will then enable the installation of solar farm ventures, primarily in Sarangani which has been touted to have the highest number of sunlight days in the country.

“Together with that and the Agus river project, we will probably be able to see significantly reduced operations of the older coal power plants,” he reiterated.

The two departments have not named the coal plants set for acquisition yet, but one of the known older fleet in the grid is the 210MW Mindanao coal-fired power facility which is currently operated by German firm STEAG State Power Inc.

The Mindanao coal plant is under a build-operate-transfer (BOT) contract with state-run National Power Corporation; and such obligation was eventually transferred to PSALM.

The buyout of the Mindanao coal-fired power facility was first targeted in the past administration, but that exercise has not gained as much traction because a feasibility study was still being recommended to be undertaken then.