A joint venture arrangement with their Independent Power Producer Administrators (IPPAs) is the option being explored by TeaM Energy Corporation if they firm up any decision to expand either the Sual or Pagbilao coal-fired plants.

“If we’re interested in expanding and they (IPPAs) are looking for partners, we might as well do it on a joint venture so there would be no conflict,” TeaM Energy president Federico E. Puno said.

Since the IPPAs would eventually own the power plants, it is construed that the priority as to capacity expansion would already be the IPPAs.

Puno explained it does not appear prudent having two power facilities in one site, especially if the owners are also different companies.

“I don’t think that at the end of the co-operation period, they (IPPAs) would agree to have two separate power plants inside the compound,” he emphasized.

But the choice of partner for the IPPA, he acknowledged, will not just be confined to the existing IPP operator.

To pursue expansion plans separately at this point, he noted, will entail rigorous process and tricky even, especially those relating to prioritization on the use of common facilities.

“Otherwise, we’ll have to enter into joint facilities agreement; and there would be a lot of questions – like, do we share common facilities or who will be priority in the use of the pier,” he stressed.

Puno said the other major challenge on capacity expansion would be in cornering off-takers, since the law already prevents government from entering into power contracts.

“The problem (with expansion) is, the additional capacity will have to be fully merchant,” he enthused. So far, many proposed greenfield power projects have not been that successful in securing much-needed contracts with targeted off-takers.

TeaM Energy previously planned to expand the Pagbilao plant by 400 megawatts. But due to the sudden slump in electricity demand as an upshot of the economic crisis, all prospective power capacity expansions have been pushed back by at least two years.

In case the company still opts to pursue such expansion venture, it may initiate talks with the Aboitiz group being the Pagbilao plant’s IPPA, on prospective joint venture deal.