$800-M Ilijan power plant project to proceed on sked

The $800-million Ilijan power plant project will still proceed as scheduled, National Power Corp. (Napocor) chief operating officer Asisclo Gonzaga said yesterday.

Gonzaga said the Department of Finance (DOF) has given its assurance that the remaining issues about the project would be settled soon.

The remaining issues involve the so-called language of supplement to republic guarantee and DOF consent to implement the National Economic and Development Authority (NEDA)-Investment Coordination Committee (ICC) Cabinet and board approval. The two documents were left unsigned by the Estrada administration, which was forced out of power as a result of EDSA II.

Gonzaga said DOF Secretary Alberto Romulo said these issues would be tackled in a Cabinet meeting this coming Tuesday.

It was learned that due to these unsigned documents, the proponents of the project led Kepko of Korea were unable to draw upon previously approved loans. The Ilijan project is a joint venture among Korean Power Corp. (Kepko), Mitsubishi Corp. of Japan, Southern Energy of the US and Kyushu Electric of Japan under the Keilo Ilijan Corp., the project company.

The Ilijan project is crucial to the $4.5-billion Malampaya project. So far, the upstream gas development of the Malampaya project is on schedule. It is about 90 percent complete and the first flow of gas to power plants is expected in September 2001.

Construction of the three power plants that will serve as downstream components of the Malampaya project, including the Ilijan, is likewise proceeding as scheduled.

However, it was noted that Ilijan power plant, though 82 percent completed and due for commissioning in October 2001, is still awaiting crucial initial disbursement from creditors such as Japan Bank for International Cooperation (JBIC) and other export credit agencies of the US and Korea, pending the issuance of the two DOF documents.

Without initial disbursement in February, the project will experience a critical cash shortfall as payments to the construction contractor fall due.

"The project may be indefinitely delayed and the government may have to pay the gas sellers $700,000 per day or $20 million to $30 million per month for delayed completion of the Ilijan power plant due to the Mapco’s gas commitment under the gas supply purchase agreement.