Ambuklao-Binga Hydroelectric Power Complex

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In July 2008, Power Sector Assets and Liabilities Management Corporation (PSALM), an agency of the Philippines’ government, divested the Ambuklao-Binga Hydroelectric Power Complex to SN Aboitiz Power Benguet, Inc. (SNAPB). SNAPB was to rehabilitate and expand the Ambuklao and Binga plants, and sell the electricity generated by the plants into the local wholesale spot market. The 175 MW power complex was located on the upper portion of the Agno River in Benguet province, Luzon island. The complex consisted of two plants: the 75 MW Ambuklao plant, located in Bokod municipality; and the 100 MW Binga plant, located in Itogon municipality, 19 km downstream of the Ambuklao plant. The Ambuklao plant had previously been operated by MIESCOR under a rehabilitate-lease-transfer concession between 1995 and 2000 (Project ID 628). The Binga plant had previosuly been operated by Chiang Jiang Energy Corp. under a similar concession contract between 1993 and 2000 (Project ID 296). When these projects concluded, the plants were transferred back to the government. The 2008 divestiture was part of the government’s privatization program, which was laid out in a comprehensive sector reform law, the Electric Power Industry Reform Act (EPIRA) of 2001. Under this act, PSALM was mandated to divest 70% of the generation assets of the state-owned National Power Corporation (NAPOCOR). The assets were divested by means of a competitive bidding process. Ten prospective bidders attended the pre-bid conference on Sep. 26, 2007. Of these, only two parties – Calaca Power Partners Co. Ltd. (a unit of AES Corp.) and SN Aboitiz Power Hydro, Inc. – submitted final bids on Nov. 28, 2007. SN Aboitiz Power Hydro, Inc. was deemed the winning bidder with a bid of US$325 million, beating Calaca Power Partners’ bid of US$305.5 million. The project company, SN Aboitiz Power Benguet Inc. (SNAPB), was a joint-venture between SN Power Invest (SN Power) of Norway and Aboitiz Equity Ventures (AEV) of the Philippines. SN Power Singapore (SNPS), a wholly-owned subsidiary of SN Power, owned a 40% equity interest in SNAPB directly and another 10% indirectly through its 16.7% equity interest in Manila-Oslo Renewable Enterprise (MORE), while AEV (through its two power subsidiaries, Aboitiz Power Corporation and Philippine Hydropower Corporation owned a 50% interest in SNAPB indirectly through its 83.3% ownership in MORE. As a result, SNAPB is owned directly and indirectly 50% by AEV and 50% by SN Power. The transaction closed in July 2008, when SNAPB made a US$227.5 million payment to PSALM, corresponding to 70% of the acquisition price of the complex (US$325 million). In August 2008, the project company paid the balance of US$99.09 million to PSALM. The total project costs were estimated at US$560 million, which included the US$325 million acquisition payment to PSALM and US$170 million in rehabilitation costs. Rehabilitation involved the re-commissioning of the Ambuklao plant, which had been shut down due to silt problems, the upgrade of the Binga plant, and an increase in the combined capacity by 50 MW (30 MW for Ambuklao and 20 MW for Binga) from 175 MW to 225 MW. Financing was secured in August 2008 with an IFC ‘A’ Loan of up to US$85 million, an IFC ‘C’ Loan of up to US$15 million, a loan from NIB (Nordic Investment Bank) of up to US$60 million and a US$200 million loan from a consortium of local banks. The remaining amount was expected to be financed by sponsors’ equity and internally generated cashflow. The rehabilitation of the Ambuklao plant was scheduled to be completed by July 2010, while the upgrade of the Binga plant was scheduled to be finished by the first half of 2013. In July 2012, it was announced that the Bing and Ambuklao hydropower plants where expanding their capacity in a rehabilitation. The rehabilitation was filed as a CDM activity at UNFCCC. Bing expanded by 25MW, and Ambuklao increased its capacity from 75MW to 105MW. The four turbines were rehabilitated in the following order: Unit four: December 2011 (from 25MW to 31.45MW) Unit One: Q3 2012 Unit Three: Q1 2013 Unit Two: Q3 2013 The cost of this enhancement was unknown, but ESTIMATED at $1milion/MW: US$55 million. http://cdm.unfccc.int/Projects/DB/SGS-UKL1299250853.42/view http://www.waterpowermagazine.com/story.asp?storyCode=2059206: "Major refurb for Philippine hydro 21 March 2011 SNAP-Benguet is a joint Norwegian and Philippine venture which is undertaking refurbishment of the Ambuklao and Binga hydro power plants. As well as increasing power capacity and solving technical issues which have caused problems for over 20 years, the company prides itself on being safe, green and responsible In 1956, the Philippines achieved a breakthrough by constructing its first hydroelectric power plant. The Ambuklao facility was constructed for power generation and flood control, and its construction began in 1950 while operation started six years later. The facility runs along the upper portion of the Agno River, the longest waterway of Luzon – one of the country’s major islands. Ambuklao plant is located in Bokod town of Benguet province, north of the Philippines. The dam is made of earth and rock fill and measures 129m in height and 452m in length, at the time the highest and biggest in South East Asia. The elevation of its crest is 758m and the roadway that runs through the top of the dam has an elevation of 756m. There are eight tainter radial gates at the dam’s spillway. Each spillway measures 12.5m x 12.5m and is 127m in length. The gross storage capacity of the dam’s reservoir is 327.17Mm3 and it has a usable storage capacity of 258Mm3. Ambuklao power plant has an installed capacity of 75MW. The plant failed to run at its original full capacity after an intensity 7.8 earthquake hit Benguet in 1990 caused the plant to shutdown due to flooding in the powerhouse. It was rehabilitated from 1992 to 1995 and operations were resumed. The surrounding landscape close to the dam site was badly affected by numerous debris slides that later caused the accelerated accumulation of silt within the reservoir which led to permanent shutdown of the plant in 1999. Because the plant is not functioning, the dam is releasing water through its bypass outlets for the power generation of Binga dam. The Binga facility was initially constructed in 1956 and began operating on 31 March 1960 – making it the second hydroelectric power plant in the country. It was also constructed for power generation and flood control and lies 19km downstream of the Ambuklao plant in the town of Itogon. The dam is 215m long and 107.37m high with a 94.5m long spillway. It is made of rock fill and has six tainter gates measuring 12.5m x 12m with hoists that are motor driven. The crest of the dam has an elevation of 586m and on top of the dam is a roadway which is 8m wide. The reservoir has a designed usable storage of 48.2Mm3 in a drawdown of 20m from an elevation of 555-575m. The usable storage of Binga reservoir has decreased over the years, caused by the 1990 earthquake. Even when there is not enough stored water, Binga can still operate and generate electricity from the augmentation of the Ambuklao water releases. Both Ambuklao and Binga are designed to operate as peaking plants, supplying power to the Luzon grid for about five hours daily. The energy generated by Binga plant, approximately 400GWh/yr, is traded in the country’s wholesale electricity spot market or WESM, the second in Asia next only to Singapore. Provisional approval was also sought from the Energy Regulatory Commission for Binga plant to provide ancillary services to the grid. These services are necessary to maintain the grid’s reliability. Privatization of Ambuklao-Binga The Philippine government embarked on a power industry privatisation and restructuring programme envisioned to ensure the adequate supply of electricity for its developing economy and manage the growing liabilities arising from past power projects. This restructuring scheme is embodied in Republic Act No. 9136, the Electric Power Industry Reform Act (EPIRA) enacted in 2001. The government’s privatisation arm, Power Sector Assets and Liabilities Management Corporation (PSALM), sold Ambuklao and Binga as a package through a public bidding held on 28 November 2007. SN Aboitiz Power-Benguet (then SN Aboitiz Power Hydro) submitted the highest bid for the power assets of US$325M. PSALM issued the Notice of Award on 19 December 2007 and turned over the power plants to SNAP-Benguet on 10 July 2008. The dams remain owned and maintained by the National Power Corporation, a government corporation. The owners SNAP-Benguet is a joint-venture between SN Power Invest (SN Power) of Norway and the Aboitiz Group. SN Power is a global renewable energy company, a joint-venture between Norwegian state-owned power company Statkraft and the state-owned Norwegian investment fund Norfund. It is a long-term industrial investor in the hydropower sector with a business model based on active ownership, the transfer of Norwegian hydropower expertise and responsible, sustainable development of renewable energy. The Aboitiz Group is one of the largest conglomerates in the Philippines focusing on electricity, financial, food and transport sectors in the country It has been involved in the Philippine electricity industry since the 1930s and has consolidated its electricity interests into a wholly-owned subsidiary called Aboitiz Power Corporation (APC). Rehabilitation and refurbishment In December 2008, SNAP-Benguet began the rehabilitation of the Ambuklao plant as provided in the asset purchase agreement it executed with the government through the government’s privatization arm PSALM. The project will re-commission the Ambuklao plant after almost 20 years of technical problems and increase its capacity from 75MW to 105MW. The scope of work includes construction of a new intake and new headrace tunnel, construction/modification of existing penstocks and replacement of all the electro-mechanical components to make the plant operational again and increase its output. In July 2010, SNAP-Benguet officially reported that it has encountered challenges in completing the plugging of the existing plant headrace tunnel needed to connect a new water intake and tunnel to the turbines for the generation of electricity. The initial attempt to close the old headrace tunnel using concrete plugs has proven difficult due to the unexpected volume of sediments (silt and clay) in the tunnel compounded by the effects of Typhoon Pepeng in October 2009. Instead, SNAP-Benguet will undertake construction of a new extended headrace tunnel to allow water to flow through to the new turbines, and consequently abandon the old tunnel. With the construction of the new headrace tunnel, the Ambuklao plant is expected to be fully completed this year when all three units are operating. SNAP-Benguet also began the upgrading of the Binga plant in April 2010 to increase the plant’s capacity and efficiency – a business decision made by the company independent from any government requirement. Binga is already operational but rehabilitation will upgrade the plant from 100MW to 120MW. Since Binga is an operating plant, it will be upgraded over a period of three years one unit at a time, until 2014 when completion is expected. It will be upgraded with the construction of a new intake and the replacement of each generation unit per year during the dry season when all units are not needed. Plant rehabilitation will include construction of a new intake similar to Ambuklao as well as installation of new electrical and mechanical equipment. Once the whole project is completed, the combined capacity of the Ambuklao and Binga plants will increase by 50MW, from 175MW to 225MW. Total rehabilitation cost and capital expenditure for expansion is estimated at US$280M. Safe, green and responsible SNAP-Benguet recognises its host communities and lives locally as a corporate citizen. Whether as part or independent of the rehabilitation project, it implements corporate social responsibility (CSR) projects that support livelihood and local eco-tourism, information technology and education, local health, environmental protection, local infrastructure, and governance in host communities. When the Ambuklao and Binga plants were constructed, indigenous peoples tilling lands in Marian Village, Binga, Sombrero and Ambuklao were displaced. On 19 May 2009, SNAP-Benguet, NPC, PSALM, and the Indigenous People (IP) of Bokod and Itogon signed an agreement creating IP sites in Ambuklao and Binga where schools, churches, day-care centres and other communal facilities are currently located. SNAP-Benguet will also provide community projects and livelihood opportunities that will also benefit the IPs displaced by the Ambuklao and Binga facilities. In March 2010, the implementing agreement for the IP accord was signed, thus turning over to the indigenous community of Barangay Tinongdan in Itogon for the use and administration of certain areas in Marian Village located near the Binga power plant. SNAP-Benguet voluntarily participated in and supported the stakeholders’ consultation process, consistent with its belief in balancing corporate investment with community investment. A similar implementing agreement is also being prepared for Ambuklao, Bokod. The project has also generated short to medium term local employment, harnessed local contractors/expertise for related project works and spurred small-scale local economic activities. The company holds meetings with communities on environmental and social concerns regarding the project. It has provided alternative access routes to minimise impact on the mobility of the residents as well as helped in the voluntary relocation to new homes of informal settlers residing near the dam and spillway areas. As a condition under the environmental compliance certificate (ECC) and a key feature of the Philippine environmental impact assessment system, a multi-partite monitoring team (MMT) for both Ambuklao and Binga were established to monitor the project in terms of compliance with the conditions of its ECC. Other than SNAP-Benguet and the environmental management bureau (EMB), the MMT is composed of government agencies, local government unit and stakeholders. Ambuklao and Binga are both complying with the ECC conditions issued by the Department of Environment and Natural Resources (DENR)-EMB on pollution prevention, permitting requirements and natural resource conservation, among many others. In soil disposal sites, settlement ponds are in place prior to discharge of the effluent to the river. Soil erosion protection such as coco-mats and gabions are also installed. These are to ensure that the water quality of the Agno River is maintained. Water monitoring results are all within the DENR standards for water quality for Class A waters. For cleared soil disposal areas, SNAP-Benguet’s contractor has applied for a tree-cutting permit. A total of 556 trees and seedlings were cut and earth-balled; 23-24 hectares of reforestation projects for 27,800 trees are for implementation to replace the trees that were cut. Waste oil from old equipment is disposed for treatment through DENR-EMB accredited treaters and transporters in accordance with the Toxic Substances and Hazardous Waste Act RA 6969. Educational plant visits and capability-building trainings are also conducted for the MMT on topics such as climate change and global warming and environmental monitoring. The Ambuklao and Binga MMTs conduct quarterly monitoring and meetings to oversee the compliance of SNAP Benguet in all environmental, social and other aspects. For a project of such a massive scope, the rehabilitation and refurbishment project has an impressive record of a little over 2M man-hours without lost time incident or accidents resulting in personnel not being able to work as a result of injury from September 2008 to April 2010. The Ambuklao rehabilitation project also received the Clean Development Mechanism (CDM) Host Country Approval on December 21, 2009. CDM is a mechanism under the Kyoto protocol allowing industrialised countries committed to greenhouse gas reduction to invest in climate-friendly ventures in developing countries. It allows emission-reduction projects in developing countries to earn certified emission reduction (CER) credits, each equivalent to one ton of carbon dioxide. Both Norway and the Philippines have signed and ratified the protocol. The approval was given by the Department of Environment and Natural Resources, the designated national authority for the CDM in the Philippines. Binga hydropower rehabilitation project was given the same approval in September last year. The approval means the projects met the national criteria for sustainable development and that SNAP possesses the legal capacity to participate in the CDM project activity. The author is Rhoda Santos, Corporate Communication, Public Relations and Branding Sr. Specialist of SN Aboitiz Power, 2nd Floor, HERCO Centre, 114 Benavidez St, Legaspi Village Makati City 1229 Philippines. Additional reporting was provided by Emmanuel Lopez and Ferdie Villanueva who are the Ambuklao-Binga project site manager and deputy, respectively" Source: NGCP Starts Benguet transmission line rehab, The Philippine Star, 18 July 2012 ADPREN, Philippine SN Aboitiz Power gets certificate for upgraded HPP unit, 26 March 2012.