GLOBAL Business Power Corp.’s (GBP) subsidiary Panay Energy Development Corp. (PEDC) and members of the Panay-Guimaras Power Supply Consortium (PPSC) have signed a power supply deal that is intended to provide lower power costs to the region.
In a disclosure to the Philippine Stock Exchange (PSE), GBP said the agreement will take effect starting July 2016 and will be sourced to Panay Energy’s 150 megawatt (MW) expansion project.
The Panay-Guimaras Power Supply Consortium is composed of Iloilo Electric Cooperatives I, II, III, Antique Electric Cooperative and Guimaras Electric Cooperative.
The 25-year Electric Power Purchase Agreement (EPPA) is in response to the projected power demand in Iloilo over the next two to five years.
Under the agreement, Panay Energy will sell to the consortium an aggregate power supply of 24 MW at the rate of P5.05 per kilowatt-hour (kWh), the lowest offered price of electricity in the Visayas.
GBP executive vice president Jaime Azurin said they expect efficient use of fuel from a single larger plant of 150 MW that is equipped with the latest circulating fluidized bed (CFB) boiler technology.
He said the cost benefits of the expansion plant enabled them to offer the lowest power rate in the region.
“We take pride in being able to bring down and offer the best rate in the market through our efficient operations and business approach,” said Azurin.
With the construction of the 150 MW expansion project, Panay Energy renewed its commitment to bring sufficient power supply to the region to sustain increasing economic activity in Panay, including the island of Boracay.
He said they were able to reduce the project’s development cost due to existing facilities, like the jetty port, that can be shared with the expansion plant.
PPSC is an alliance of electric cooperatives in the Panay-Guimaras area established for the main purpose of negotiating more competitive prices through the aggregation of power requirements.
The PPSC adopted the Swiss challenge procurement process to secure the best offer for its power supply requirement.
Under the Swiss challenge system, Panay Energy’s proposal went through the competitive bidding process, which allowed other power generators to challenge its offer.
PPSC president and Iloilo Electric Cooperative (ILECO) I general manager Engr. Wilfred Billena said that no other supplier matched Panay Energy’s P5.05 per kWh offer.
The Swiss challenge bidding process is in line with the Electric Power Industry Reform Act’s (EPIRA) primary objective of bringing down electricity rates by encouraging competition.
As the bidding process promotes transparency and market-driven rates, Azurin said the successful outcome of the Swiss challenge most importantly benefits the consumers of Panay.
Moreover, reliability of power supply is considerably improved as Panay Energy locates both existing and expansion facilities near key offtakers to lessen dependence on submarine cables and reduce chances of supply disruptions.
Poised to commence operations by June 2016, construction is already 40 percent complete and ahead of schedule.