Many parts of the Visayas region are economically promising but poor. Underinvestment in power generation, which has led demand to outstrip supply, threatens to hold back further development in the region. Intermittent blackouts on the islands of Cebu, Panay, and Negros are set to become more frequent until more power is made available.

'A steady supply of power will help develop the local economy, creating jobs in manufacturing, tourism and other sectors that will boost incomes for local families in the region. At the same time, a reliable power supply will allow hospitals, schools, and other public services to fully function,' said Joe Yamagata, Deputy Director General in ADB's Private Sector Operations Department.

ADB will provide the 12-year loan to KEPCO SPC Power Corporation (KSPC), a joint venture between Korea Electric Power Corporation of the Republic of Korea and SPC Power Corporation of the Philippines, to build a 200-megawatt (MW) coal-fired power plant in Naga City, Cebu, on land already being used by the Naga Power Plant Complex.

Coal-based generation is the most practical option in Cebu Province since further use of geothermal resources - already providing 70% of power in the Visayas - cannot provide enough immediate, reliable, and low-cost power. The new plant will use circulating fluidized bed combustion boilers, the best technology available for plants of this size. This is in line with ADB's Energy Policy (2009) of helping Asia secure adequate power supply while promoting cleaner power generation.

The first 100 MW unit is scheduled to come on line in February 2011 and the second in May 2011. KSPC will sell power from the plant primarily to electricity cooperatives on Cebu and Negros islands and to the wholesale electricity spot market once it is set up in the Visayas.

'The project will help promote a competitive market for electricity and provide a model for future private-sector investment in power generation, including renewables. These goals support the government's efforts to reform the power sector,' said Mr. Yamagata.#