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Pagbilao gets court reprieve to proceed with power plant

Pagbilao Energy Corp.  said Thursday it obtained a court injunction to allow the operation of a new 420-megawatt coal-fired power plant in Quezon province.

Pagbilao Energy, a joint venture of the Aboitiz Group’s Therma Power Inc.  and Japan’s Team Energy Corp., said the Regional Trial Court of Lucena City, Branch 57 issued a temporary restraining order against the implementation of a cease-and-desist order issued by Pagbilao’s local government unit on the power plant.

Aboitiz Power Corp. said Pagbilao Energy filed an application for injunction and for the issuance of the TRO to restrain the local government unit of Pagbilao from enforcing the CDO issued against the operations of the company’s power plant.

The company invested close to $1 billion to put up the power plant called Pagbilao 3, adjacent to the existing units 1 and 2 of the Pagbilao power station in Quezon province.

“During the course of PEC’s application for a business permit for calendar year 2018 from the municipality of Pagbilao, the municipality required PEC to execute a memorandum of agreement  implementing its corporate social responsibility [CSR] programs for an amount above the company’s approved budget for CSR,”  Aboitiz Power said in a disclosure to the stock exchange Thursday.

Aboitiz Power said the municipality refused to issue the business permit  without the executed memorandum of agreement and instead issued the CDO.

Pagbilao Energy then filed the application for injunction and obtained the TRO to prevent the municipality from implementing what the company was was an unwarranted CDO.

The court, in an order issued Feb. 28, 2018, ordered the mayor of Pagbilao to cease and desist from implementing the assailed CDO.

“PEC maintains that the execution of the MOA is not part of the published and legal requirements for the issuance by the municipality of a local business permit,” Aboitiz Power said.

It said the Pagbilao plant had received all the necessary endorsements required from the relevant local government units, including the Quezon provincial government, the municipality of Pagbilao and the host barangay of Ibabang Polo.

It said the plant had also secured all clearances and endorsements from national government agencies, such as the Department of Energy and the Department of Environment and Natural Resources.

“The potential delay in the commercial operations of PEC’s power plant would render PEC unable to perform its commitments to its suppliers, customers, and to the Luzon Grid,” it said.

Pagbilao Energy tapped Mitsubishi Hitachi Power System Ltd. and Daelim Industrial Co. Ltd. for the engineering, procurement and construction contractors for the power project, which is set to be completed this year.

The project is partly funded by a loan amounting to P33.3 billion that was secured by the company through joint arrangers BDO Capital and Investment Corp., BPI Capital Corp. and First Metro Investment Corp.

Topics: Pagbilao Energy Corp
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