CEBU CITY – Cebu-based power consortium Cebu Energy Development Corporation (Cebu Energy) announced Tuesday it has already inked an agreement with power distribution utility firm Visayan Electric Company (Veco) for a 105-megawatt (MW) power supply requirement.

Cebu Energy president Jesus Alcordo bared this announcement yesterday during the weekly 888 News Forum, where he revealed that Veco and Cebu Energy have already inked a bilateral trade agreement last week, described to be a “significant development in Cebu’s energy sector.”

Cebu Energy, a consortium formed by Global Formosa (a joint venture of Metrobank subsidiary Global Business Power Corporation and Formosa Heavy Industries) and Abovant Holdings, Inc. (a joint venture of Aboitiz Power Corporation and Vivant Corporation), targets to operate a 246-megawatt coal-fired power plant in Toledo City, Cebu by 2010, with the first of the three 83-MW unit expected to be operational in March next year.

“The 105-MW will be distributed in tranches. With the first 83-MW gross capacity operational early next year, we will allocate a bulk of the power supply to Veco,” Alcordo told reporters in an interview.

Veco, the second largest distribution utility in the Philippines, has over 300-MW capacity.

Alcordo said the contracted price it has set with Veco is “competitive.”

“Compared to bunker fuel, coal-fired power plants are cheaper. The average variable cost of bunker fuel is P6 per kilowatt hour (kwh) while coal-fired power plants average at P1.80 to P1.90 per kwh, which is advantageous to distribution companies,” he explained.

Alcordo said the power supply agreement with Veco is estimated to last for 20 years.

Veco vice president for administration Ricardo Lacson admitted that while he is not privy to the details of the contract, he believes the power agreement will be a “huge step” in arresting the looming power shortage in Cebu brought by a deficient power supply in the Cebu-Negros-Panay grid.

However, Lacson said Veco is in talks with other power generation companies as existing bilateral contracts with other independent power producers are expiring next year.