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Interview

Kyu-Byeng Hwang, President, KEPCO, Philippines

21.01.2014 / Energyboardroom

Kyu-Byeng Hwang, president of Kepco Philippines, a company highly acclaimed for its environmentally friendly power generation solutions, discusses the reality that there still remains a place for coal in the Filipino energy mix. Introducing the concept of Circulating Fluidized Bed Combustion (CFBC), he explains how it is possible to reconcile the need for doubling affordable energy capacity with environmental objectives of lower oxide emissions.

Having arrived in the Philippines in 1995, what has been Kepco’s winning formula over the years?

The question of success in the Philippines has always depended on Kepco’s commitment to the Philippines and the company is very proud of all its projects and achievements in the country. The quality and reliability of electricity supply has improved since Kepco has arrived, as there are now fewer blackouts. Kepco’s first initiatives included the rehabilitation of the 650 MW Malaya power plant complex, where Kepco dramatically increased output and efficiency. The 1,200 MW Ilijan natural gas combined-cycle power station in Batangas, considered to be one of the top 12 power plants in its class operating globally, is so far the biggest project Kepco has undertaken out of Korea. In this respect, it has quite a symbolic status. A third major asset is the 200MW Cebu coal plant, which produces electricity at the cheapest rate in the Visayas. The plant additionally has technology, which lowers emissions of both sulphur oxides and nitrogen oxides into the atmosphere.

Kepco has experience in a diverse range of thermal technologies, and Kepco considers this to be a solid base from which to seek new contracts, since the company’s ability is proven.

Our commitment to the Philippines is underlined not only by our construction of robust, long lasting and efficient power plants, but also the manner in which we conduct our business. In 2009, Kepco was awarded a Gold Medal by a notable publication covering the power industry, commending the quality of Kepco’s coal fired stations. More recently, Kepco was deemed to have the most environmentally friendly power plant in the Philippines—an achievement the company is particularly proud of.

Mr. Chang, the President of the Korean Chamber of Commerce in the Philippines, was recently quoted as saying that Korean investors are investing in ASEAN markets to reduce risk associated with a potential downturn in China. Given that Kepco was ahead of this trend, having arrived here in the 1990’s, what were the competitive advantages that Kepco recognized in the Philippines for it to be the first overseas venture?

Kepco considers the Korean market to be mature and the company is now looking for other opportunities where it can deploy the experience and skills of its engineers and as early as 1990, Kepco’s CEO, Mr. Lee, started to seek openings for Kepco’s project experience to be utilized outside of Korea. Early on, the Philippines emerged as a promising opening for Kepco, although the management was aware that entering the Philippines was not without risks. Ilijan project was bidded out under a Power Purchase Agreement from the Philippine government, which made the company’s participation in auctions easier and more secure, and we won the project.

One threat that could not have been previously predicted in Kepco’s operations was the Asian Financial crisis, which threatened Kepco’s access to finance. Despite the chaos this financial turmoil caused in wider markets, Kepco managed to ride out this storm satisfactorily. The whole process of entering the Philippine market has been a substantial and useful learning experience for Kepco. Chiefly, Kepco’s understanding that ensuring plants are highly reliable was reinforced; those power generators, which best contribute to the grid, will earn a reputation for quality and their products will subsequently be seen as attractive. As a power utility company, Kepco has built its reputation by providing the most efficient plants in the Philippines.

The Philippines set the precedent in giving Kepco the confidence to expand into other countries, and the Philippines remains a significant portion of our global operation, providing much of the demand for Kepco services globally.

Which were some of the challenges you faced in building the largest natural gas facility in the country, the Ilijan power plant?

The 1,200-MW Ilijan combined-cycle plant, located on a 60-acre site at Arenas Point in Batangas City faced initial challenges such as the lack of an existing transmission grid and a natural gas pipeline nearby, so those infrastructures had to be built from scratch.

Kepco constructed and owns the plant, via a 20-year ECA with the National Power Corporation (NPC) under a Build-Operate-Transfer (BOT) scheme that expires on June 4, 2022. NPC supplies gas to the Ilijan power plant from the Malampaya gas field in Palawan. The Ilijan Power Plant consists of two blocks with a rated capacity of 600 MW each.

The 200MW Cebu plant utilizes state of the art Circulating Fluidised Bed Combustion (CFBC) technology. How would you rate the operational efficiency of this technology?

CFBC was adopted to reduce Kepco’s environmental impact particularly to address concerns over SOX and NOX gases. CFBC technology is used to reduce emissions of these two pollutants and Kepco eagerly embraced the opportunity to reduce output of these gases.

It is clear that Kepco needs to supply base load electricity from reliable operating plants—demand necessitates this. Gas and coal are principally used in this role, but there are numerous groups opposed to the use of coal, particularly NGOs, and that is one key dilemma for the Philippines. For the meantime, coal plants must be constructed because society badly needs this power and the use of CFBC technology will, at least, reduce the environmental impact of these new plants. The Philippines has the objective of doubling energy generation capacity in the near future, so engineering projects need to supply electricity whilst holistically considering impacts caused by provision of affordable energy.

Kepco has recently passed 3.16 billion worth of power generation equipment to 17 different power cooperatives. Why is this sort of measure important to Kepco?

Kepco strives for good relations with the cooperatives in the Philippines. Aside from directly providing these cooperatives with equipment, Kepco has also been significantly involved in the electrification of many rural communities in Luzon and the Visayas. CSR is irrefutably important and Kepco considers it essential to ensure that a wide array of stakeholders benefit from access to electricity. Empowering local communities is a global strategy for Kepco.

Where would you like to see Kepco in ten years?

Kepco is likely to expand further in the Middle East and China. The former region is growing and there is substantial potential for power generators to supply these areas. However, the Philippines will remain a priority investment as Kepco is continuously seeking to grow here: our vision is to be a leading power supplier here in the Philippines. Our priority is the supply of stable power to the grid here in the Philippines, and to ensure that good relations with local communities are maintained, developed and expanded. In particular, we seek to gain recognition for our advanced CSR work, which is a key aspect of our company’s brand.

 

To read more interviews and articles on the Philippines, and to download the latest free report on the country, click here.

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