Private Power Supply Options for San Miguel Corporation
K&M served as technical and financial consultants to the US Agency for International Development (USAID), Office of Energy, in cooperation with Bechtel National, Inc. K&M reviewed electric power and steam requirements of the San Miguel Corporation’s (SMC) industrial facilities in Canlubang and San Fernando. San Miguel Corporation is the Philippines’ largest manufacturing company and one of the premier companies in the Asia-Pacific region. Its’ primary industry sector is food and beverage.
For this assignment, K&M assessed the technical, commercial and economic aspects of various private power technology options, including bioenergy systems and other renewable energy technologies, to meet SMC’s near-term load growth projections and to provide project structuring and planning as required.
To assess a program for reform and determine an accurate tariff and price structure for the Philippines petroleum industry, the Philippine Department of Energy (DOE) and USAID contracted K&M to conduct a technical, financial and institutional reform evaluation of the domestic oil sector. K&M’s review and evaluation of the oil sector included: analysis of detailed the pricing conditions of the Philippine oil sector; identifying short and long-term objectives for the sector; evaluating the current cost and regulatory/institutional conditions of the industry; analyzing the capabilities and strength of the oil refinery industry; and presented alternative approaches to the current Philippines pricing mechanism.
K&M provided technical assistance to the Philippine Department of Energy in restructuring the electricity sector. K&M assisted in developing and coordinating institutional and regulatory policies in such areas as private sector participation and investment in utilizing energy resources, tariff types and levels, personnel allocation, and privatization of operation & maintenance (O&M). Specifically, K&M assisted in the establishment of the Energy Regulatory Board and the National Power Company, developed contract procedures, standards, commodity procurement procedures, and power purchase agreements, and guided the privatization and commercialization efforts of the Philippine National Oil Company.
K&M served as project development consultants to the project sponsor, OMI, Inc., for a private bulk water supply project in the Province of Cavité, Philippines. The system, serving approximately 500,000 people, included of a 125,000 m3/day surface water treatment plant as well as associated works, including the water intake system, transmission lines and reservoirs. K&M’s scope of services included structuring the project’s commercial arrangements, undertaking detailed financial modeling and risk analysis activities, and mobilizing debt and equity financing for the project. As part of this assignment, K&M prepared a comprehensive financial and economic analysis of the Project. The analysis provided an indication of the tariff rates and affordability issues associated with this private sector project. K&M assessed the ability to implement an economically sustainable tariff, while also meeting indicative rates of return for investment and project financing criteria. K&M also recommended a framework for examining potential project structures and financing strategies for implementing the project.
K&M served as Commercial Advisor and as Owner’s Engineer to Korea Electric Power Corporation (KEPCO) providing multi-faceted IPP evaluation and negotiation support during the project’s development phase. K&M assisted KEPCO with all commercial and technical aspects of the project’s structure and development. K&M’s services included reviewing and negotiating major project agreements (the ECA and EPC), and evaluating risk allocation and advising on risk mitigation measures. In order to determine optimal equipment selection, K&M performed a technical due diligence on the use of the MHI 501-G advanced technology gas turbine, and conducted an environmental compliance review. Subsequently, K&M served as On-Site Owner’s Engineer to KEPCO Ilijan Corporation (KEILCO) during the construction, startup and commissioning phase of the project. The project cost US$700 million and it entered commercial operations in 2002.
K&M was engaged by the International Finance Corporation (IFC) to advise the Bases Conversion and Development Authority (BCDA) on options for delivering water, electricity, and solid waste management services to the Clark Green City (CGC) project. The CGC project is a planned metropolitan area located 110 km north of Manila in Central Luzon. The CGC project will be a modern, mixed-use urban area designed to be an example of green urban planning, green building design, and low-carbon urban development.
K&M reviewed the technical feasibility and cost efficiency of water, electricity, and solid waste management supply services to the planned development. For each type of utility service, K&M evaluated Public-Private Partnership (PPP) service delivery options. K&M’s work will support the IFC’s advice to the BCDA as to which utility service options should be developed and how each option should be procured.