(KEPCO)KOREAN ELECTRIC POWER PLANT

CORPORATION
COLON CITY OFNAGA CEBU

Philippines: KEPCO-Salcons 200MW coal-fired power plant (Naga,

Cebu)

In 2008, KEPCO Philippines Holdings (a wholly-owned subsidiary of Korea Electric

Power Co or KEPCO) went into joint venture with Salcon Power and formed KEPCO
SPC Power Corp (KSPC) to construct and operate a 200MW coal power plant in
Naga, Cebu. In June 2008, SPC Power Corp obtained a $100M loan from Korean
Export-Import Bank (Korean Eximbank) for the coal-fired project. The Asian
Development Bank (ADB) is also set to approve a US$120M loan to KSPC for the
construction of the Naga coal-fired plant (Visayas Base Load Power Project).
The project is conceptualized under a new scheme of a merchant power plant, on a
buildownoperate basis, characterized by the execution of power sales contracts
with distribution utilities and electric cooperatives, instead of purchase power
agreements with National Power Corporation (NPC). The generating company is
responsible for the whole construction, operation, and maintenance of the plant,
including fuel supply without any Philippine government guarantees. Once
completed, the Naga plant is expected to supply power to six electric cooperatives
that have signed a total 120MW power sales contracts. The proposed ADB loan will
also require land acquisition and resettlement due to the construction of new
transmission lines. The project is under ADBs Private Sector Operations
Department and was originally set for Board approval in September 2009. ADBs
decision is now postponed indefinitely; environmental, social and economic issues
are being raised by local residents, environmental lawyers and electric coop
consumers, including a Catholic Bishop who wrote the ADB President to deny
KSPCs loan application.
On or before Oct 27, 2009, ADB uploaded this information at its project website:
"The Project's ash disposal plan may be revised to consider alternatives to transport
to a nearby cement plant for use as raw material, as reported in the SEIA. While
the cement plant remains an option, the Project is also considering use of the ash
as land-fill in a pre-approved site provided by Cebu Provincial Government.

Whichever alternative is chosen, ADB will review KSPC's formulation and

implementation of its Ash Disposal Management Plan, including ash content's
testing, collection, transportation, and final placement. ADB will also conduct
regular monitoring, to ensure the Project's ash disposal complies with all
environmental safeguards requirements. (A Corrigendum to the SEIA will be posted
shortly.)"
ADB'S SUMMARY ENVIRONMENTAL IMPACT ASSESSMENT (SEIA) & INITIAL
POVERTY & SOCIAL ANALYSIS (IPSA) The SEIA and IPSA largely glossed over
health & environmental risks posed by the coal-fired plant; there is lack of baseline
data of any initial studies undertaken. The project's mitigation plan does not
include a targetted health program to monitor health risks related to ash coal
residues, but simply CSR-related community work. There is very minimal mention,
if any, of impacts by the coal-fired power plant on coastal communities/fisheries &
marine ecosystems.
HEALTH & ENVIRONMENTAL RISKS In 2004, environmental activists (Cebu
Alliance for Renewable Energy/CARE) called on Salcon-KEPCO to stop their
expansion plans for coal-fired plants and instead develop renewable energy
sources. In 2005, CARE held protest actions at public hearings to block the
application for environmental compliance certificate (ECC), urging that a thorough
evaluation be undertaken of the current health condition of residents in Naga. CARE
believed that without taking blood and hair samples in determining the extent of
toxicity of mercury in the blood of Naga residents, no one can predict the future
accumulation of this substance in the body of Naga citizens. Salcon contracted the
services of a PR firm (PRworksInc) which succeeded in tilting the balance of media
coverage in Salcons favor. [A three-month community relations campaign in the
communities around the Salcon complex resulted in the mobilization of thousands
of residents who expressed support for the construction of the coal-fired plants
during the municipal ECC and Cebu Provincial Board hearings.]
CONTROVERSIAL COAL ASH DUMPSITE & MOA In May 2009, the Cebu provincial
government signed a Memorandum of Agreement (MOA) with KPSC where the
Province undertook to allow KEPCO to dump its fly ash into a dumpsite for a term of
at least twenty-five years, subject to extension. Potential revenue from the coal ash
arrangement is estimated at P48 million ($1 million); for each ton of ash dumped
by KPSC, the province will be paid $1. Several issues are being raised: (a) The coal
ash dumpsite, the 25-hectare Balili resort property purchased in 2008 by the Cebu
province, is currently the subject of a pending inquiry by the Visayas Ombudsman;
the land classification and titling of the Balili resort land is being questioned by
environmental lawyers. (b) 80% of the Balili dumpsite property is submerged;
contemplating a coal ash dumpsite along the shores is not only pathetically nave

but also ecologically destructive, patently illegal and preposterous. (c) The lawyers
also asked the Ombudsman to look into the ash dumping deal, calling it an
extremely hazardous project, considering that coal ash has radioactive elements
and contain hazardous substances harmful to living things and the ecosystem, such
as mercury, lead, arsenic, among others. (d) The MOA is a clear conflict of interest.
Environmental lawyers claim that by agreeing to host the dumping of coal ash into
the Balili property and assuming KEPCOs legal responsibility for the proper
handling and disposal of its coal ash, the Province of Cebu has effectively bargained
away its power and authority to, monitor, regulate and keep KEPCOs activities
compliant with legal environmental standards. Having thus assumed KEPCOs
responsibility for the dumping of its waste, the Province of Cebu would be
powerless to hold KEPCO responsible for violation of the law in regard to the proper
disposal of its coal ash, as KEPCO could easily shift the blame back to the Province,
on the strength of the latters undertakings under the MOA.
'NOTICE TO SUE' KSPC & GOVERNMENT OFFICIALS In August 2009, local citizens
sent a Notice to Sue to KSPC and government officials for violation of the 1987
Philippine Constitution and environmental laws (Clean Air Act, Clean Water Act,
Ecological Solid Waste Management Act) and Local Government Code. Among the
issues being raised are: the indiscriminate dumping of toxic coal ash; disregard of
ecological and public health, and safety issues; gross neglect and failure to perform
official responsibilities under the laws; onsite inspection to listen to the pleas of the
affected community; water contamination and deteriorating ecosystem and
concomitant loss of fishing livelihoods; climate change implications; and lack of
facilities for testing and monitoring and hard data of national and local government
units in assessing the health, safety and ecological implications. The citizens group
also urged ADB to send an official delegation to conduct inspection and interview
the stakeholders of Cebu.
BSIHOP TO ADB: DENY KSPC LOAN TO 'TOXIC' POWER PLANT &
DISADVANTAGEOUS POWER DEALS In a letter dated 9 September 2009 to ADB
President Haruhiko Kuroda, Bishop Vicente Navarra of the Bacolod Diocese appealed
to the Bank to deny the approval of KSPCs loan application for the construction of
its toxic power plant. KPSC will sell and has contracted its electricity supply to
Negros electric coops, including the Bacolod-based Central Negros Electric
Cooperative (CENECO). The Bacolod Diocese and other NGOs are strongly opposed
to the KSPC-CENECO contract on the following grounds: (a) contract was
consummated without public consultation; (b) contract violates provisions of EPIRA,
or Electric Power Industry Reform Act, particularly on open access and retail
competition; (c) Naga plant is fueled by coal which is carbon-intensive and thus
harmful to health and environment; and (d) contract contains highly onerous terms
and conditions which are clearly disadvantageous to consumers.

NON-COMPLIANCE WITH CORE LABOR STANDARDS IN KEPCO-SPC There have

been continuous reports of unfair labor practices and violations of trade union rights
by the private sector proponent -- Unions were not earlier recognized; Notice to
strike due to union-busting allegations threaten industrial peace and reliability of
power supply in the province; Libel complaints filed by management against trade
union officials for whistle-blowing of silent profits earned by the company, in what
might be viewed as harassment of trade union officers.
SHIFT FINANCING FROM DIRTY ENERGY TO RENEWABLES The proposed project
will utilize circulating fluidized bed combustion (CFBC) technology which is known to
produce about four (4) times more coal combustion waste per megawatt of
electricity than conventional coal burning plants, making disposal of toxic coal ash a
primordial concern when the power plants operate. In light of ADBs new energy
policy that calls for clean energy, ADB financing particularly to private sector
proponents must be redirected from existing dirty energy to renewables, including
the financing of adaptation and mitigation measures and energy efficiency projects.

Vision:

AN established authority in energy management and

technical excellence ,KEPCO PHILS. Continues to increase shareholder value
through the reliability of its facilities and stability of operations,and to
ensure management efficiency through continuous process improvement.

OUR MISSION:To provide quality ,reliability,and environment friendly energy

at best value of the customers and to contribute to Philippine society by
enhancing its energy sector and promoting sustainable community
development.

CEBU, the Philippines, Dec. 1 (Yonhap) -- South Korea's state-run Korea Electric Power Corp.
(KEPCO) said Tuesday that it is seeking to expand its electric power business in the Philippines
by building another coal-powered plant there.
KEPCO now runs a coal-fired power plant with two 103 megawatt circulating fluidized bed
combustion (CFBC) generators in Cebu, a famous resort island in central Philippines. It is a joint
venture with local electricity supplier Salcon Power Corp. (SPC), under which the South Korean
utility firm has a 60-percent stake.
The company is engaged in design, construction, operation, maintenance and management of
power generation and supply and distribution of electricity.
Since its completion in 2011, the Cebu plant has run at nearly full capacity, accounting for
about 30 percent of the island's entire electricity supply.
"We're preparing to build a new plant on the island, after acquiring the nearby older facility of
Naga Power Plant," said Cho Chang-yong, president of KEPCO SPC Power Corp., the joint
venture of KEPCO and SPC.
The KEPCO-SPC joint venture acquired Naga Power Plant from the Philippines' National
Power Corp. last year, with KEPCO holding a 40-percent stake in the power station. Its complex
is located just across the road from KEPCO's Cebu plant.
Built decades ago, the Naga power complex has four generators with a combined capacity of
some 400MW, including two coal-fired generators and one land-based gas turbine plant.
"They are too old to operate at full capacity. We have considered rebuilding it to profit on the
rising demand for electricity in the Philippines," he said.
Cho said proceedings for selecting a main contractor for engineering, procurement and
construction (EPC) is now underway.
He said KEPCO is doing its best to win the EPC rights to create synergy between its Cebu
plant and the Naga station.
"It will help reduce costs and improve efficiency in sharing manpower management and raw
material supply," Cho said.
Under the plan, the new Naga station will house two 150MW coal power generators, some
1.5-fold larger than the Cebu plant.
"We are planning to demolish the old facilities and build a new, bigger power plant there right
after we are picked," he said. "The new plant will be also a CFBC type, the same as the Cebu
plant."
It is expected to take at least four years to complete construction, he added.

But he refused to give details on financial terms and the exact schedule for the bidding
procedure, citing the sensitivity of the issue.

The Korea Electric

Power Corp. (KEPCO)'s coal-fired power plant in Cebu, the Philippines. (Photo courtesy of KEPCO)

KEPCO has eyed overseas energy markets to combat a slowdown in domestic electrical
demand amid the emergence of low-electricity consuming industries.
It has 11 overseas operations in seven countries including in Jordan, the United Arab Emirates
and the Philippines.
The power company has focused on not only building thermal power plants and transmitting
and distributing power, but also communication, energy exploration and building nuclear and
hydraulic power projects.
Its first nuclear power project worth US$40 billion is scheduled to be completed by 2020 in
Barakah, some 270 kilometers west of Abu Dhabi, in the UAE. The Barakah Nuclear Power
Plant will run four nuclear reactors with a total capacity of 5,600MW.