Before Steag State Power Inc. could firm up expansion plans for its 210-megawatt coal-fired power project in Mindanao, it may need to wait first for the outcome of the equity divestment being undertaken by its parent German firm Evonik Industries AG.

Evonik is reportedly selling shares at its STEAG power unit, and the transaction is due for completion around May this year. JP Morgan had been reported financial advisor for the deal.

While the sale process is done at the parent level, sources from shareholders in the local subsidiary noted that “developments on the sale are monitored for whatever prospects are in store for the company in the Philippines.”

Steag State Power already hinted previously of its planned expansion which may build up its capacity by additional 100 to 150 megawatts. Since the last time the company came up with such indication, it has not given updated information yet on proposed capacity shoring-up venture.

“If there will be new shareholders coming in at the parent level, they might be able to appreciate the prospects that we have for capacity expansion in Mindanao. So by then, we may decide to pursue expansion program,” sources noted.

With current situation in the Mindanao grid’s power supply, opportunities are all “geared up” for project proponents to finally take off from drawing boards their long-planned capacity expansion.

Given that Mindanao has always been hydro-dependent, the drought condition brought by the El Niño phenomenon has set realization for capacity addition that relies on other fuels, coal or oil-fired facilities, for that matter.

However, because of the contentious issue of rates for consumers in the area, project proponents have been prodding government on the establishment of a Wholesale Electricity Spot Market (WESM) to serve as price trendsetter and alternative market for forthcoming capacity in the grid.

The difficulty in selling capacity ‘door-to-door’ to prospective off-takers and the absence of a spot market in the area have been cited among the factors razing investment appetite for the grid in the past years.

The Department of Energy (DoE) already indicated concurrence with the plan to establish an electricity spot market in Mindanao as a way to stimulate investors’ interest, so capital flow will be spurred for new power projects.

Of the three grids, Mindanao is seen suffering the worst of brownouts if no new capacity will come in by 2012 – that is even without an El Niño condition triggering de-rated capacity at Agus and Pulangui plants.