Quezon Power, SBPL thrive amidst supply risks

Despite nearing the quarter-century mark in operations, Quezon Power maintains a strong performance.

Quezon Power (Philippines), Limited Co. and San Buenaventura Power Ltd. Co. (SBPL), two key players in the Philippine power industry, have seen a robust performance this year, despite the inherent challenges associated with single-source fuel procurement.

“Both Quezon Power and SBPL have been performing rather well this year. Whilst profit is essential, our main focus is on reliability—making sure we can deliver on our commitments to our customers,” Frank Thiel, managing director of Quezon Power and General Manager of San Buenaventura, said.

Thiel noted that their primary concern is the security of supply for fuel. Both companies procure their coal from Indonesia, making them vulnerable to any export restrictions imposed by the Indonesian government.

“We keep a very large inventory of 45 days for Quezon Power and 30 days for SBPL. This is how we mitigate the risk associated with fuel supply, which is by far the biggest risk a power plant like ours faces in the Philippines,” Thiel added.

Addressing this concern, Thiel revealed that both companies are evaluating alternative sources of coal. “We are constantly looking to see if we can increase or diversify the fuel supply by going to other countries. For instance, we are trying to evaluate bringing coal from Australia as an alternative,” he said.

He also mentioned that they are in talks for a 10-year power supply agreement with a retailer as Quezon Power's power supply agreement with electricity distribution company Manila Electric Co. will end in 2025.

Another essential aspect of future planning involves maintaining the plants themselves. The Quezon Power plant has been operating for 23 years. As this facility nears the quarter-century mark, the need for refurbishing becomes increasingly critical.

Thiel said, “By the time the current power supply agreement lapses, the plant will be 25 years old; so we aim to operate safely and reliably for another 10 years.”

Quezon Power and SBPL are undergoing both technical and commercial evaluations to reconcile these two aspects effectively. “On the one hand, by enhancing and refurbishing the plant; on the other hand, extending it by securing a different contract,” he said.