135-MW South Luzon plant delayed

by Bernie Magkilat, 19 April 2015
from Manila Bulletin

The 135-megawatt coal fired power plant of South Luzon Thermal Energy Corp. will be delayed for a year after the P13.3 billion project encountered some operational force majeur problems.

The Board of Investments, which approved the project registration in June 2012, has already granted the request of South Luzon to revise the start of its commercial operation and the movement of the income tax holiday reckoning to April 2015 instead of August 2014. It was granted income tax holiday of four years from the start of commercial operations. The project is expected to employ 96.

Major reasons cited for the movement of the start of commercial operations and ITH reckoning date was the delay in the possession of project site and several typhoons that hit the province of Batangas, namely Maring, Santi, Labuyo and Yolanda that render construction activities risky for both manpower and equipment.

Because of the heavy rainfall and typhoons, the project also experienced delays in securing excavation and locational clearance from the town of Calaca.

“Premises considered, it is believed that the reasons given specifically the effects caused by the typhoons and heavy rains are operational force majeure which has impaired the viability of the company,” BOI documents showed.

The BOI further noted that based on the company’s submission, the heavy rains and typhoons affected major works and activities resulting in a total of 178 days of delays in the construction and or completion of the project.

Of the 178 days, 57 days were devoted to rectifying the damage caused by the typhoons and rainfall, which had caused mucky soil, affecting the general pace of the construction as certain works, such as excavation and piling have to be suspended.

As a matter of policy, the BOI may grant a request for deferment of start of commercial operations with justifiable cause for a maximum of one year based on Rule XII of IRR of E.O. 226.

Article 7 of Executive Order 226 also extends the period of availment of incentives by a registered enterprise, provided that the total period of availment shall not exceed ten years.

During its registration with the BOI, the all Filipino-owned company had a project cost of P12.877 billion but the actual investments as of date was already P13.344 billion.