AC Energy open for potential buyers of Kauswagan plant


AC Energy is eyeing the early sale of its 4 x 135 MW coal-fired power plant in Kauswagan, Lanao del Norte in Mindanao, citing “active discussions” with interested parties.

“I can’t comment because we have a nondisclosure agreement with our potential partners/investors. Of course, we can’t say who these parties are,” AC Energy President Eric Francia was quoted as saying.

“But I would probably make a decision in the next couple of months. It’s fluid because we started this process earlier this year and we always said it’s actually flexible,” he added.

As of now, AC Energy hasn’t decided yet if they will opt for a partnership or sell the power asset, noting investors offering both a partnership at a platform level or for total control of the asset.

Manuel V. Pangilinan earlier expressed interest.

“We heard about that. We’re trying to get data. What I am told, it is a coal project. It seems to be almost finished so it’s ready for operation. It looks interesting because we don’t have to wait for all sorts of approval.  We will probably take a look at it,” Pangilinan, Chairman of the Manila Electric Co. (Meralco), was quoted as saying.

Currently, AC Energy is focused in finishing the construction of the Kauswagan plant by 2019.

“Again, our top priority at this point is to finish the Kauswagan project by 2019. We don’t want to lose focus. First quarter is our target for the start-up of unit 1 and thereafter every couple of months for the other units.”

AC Energy’s committed equity is around 70 percent with a value of about $250 million, Francia said.

“We will continue to look for customers. But there’s oversupply in Mindanao so it’s not easy. But the good news with having an extra unit is that we will be able to serve our customers almost to close to 100 percent of availability, because if one unit is down we have a back up reserve,” he said.

In addition, he is also confident that demand for power in Mindanao will grow as the Department of Energy (DOE) expected demand to hit 2,100 MW peak next year.

Due to the power plant’s large capacity and strategic location, it will surely attract investors, Francia said.

“There’s quite a bit of interest in Kauswagan because it’s a sizeable plant. It’s the most competitive in Mindanao. It’s strategically located because it will be the major substation that will ultimately be connected to Cebu because the Mindanao-Visayas interconnection typically needs two major substations to balance the frequency.”

“That’s why…if you look at the NGCP plan, while [the subsea cable] terminates in Zamboanga, there’s an overhead line that connects directly from the cable landing to Kauswagan. So that forms an integral part of the backbone to connect Mindanao and Visayas,” he explained.

For $579.2 million, Aboitiz Power Corp. acquired a 49-percent voting stake and 60-percent economic interest in AA Thermal, AC Energy’s thermal business.

The transaction is connected to the company’s goal to achieve 5 gigawatts from a balanced mix of renewables and thermal assets by 2025.

“We’re close to 50-50. We’re in a nice position. This is our objective for 2025 to be at least 50 percent renewables. We are trimming down to achieve this balance. So, this selldown of AA Thermal to Aboitiz helps balance our portfolio and allows us to raise capital for our growth. We can maintain the balance we have now in 2018 all the way to 2025,” said Francia.