Sojitz Corporation


Receipt of 2 billion Yen Order for Coal-Fired Power Plant Construction Work for IPP in the Philippines

Dec. 2, 2003

TOKYO(as of December 2, 2003)--The Nissho Iwai Corporation, jointly with Kawasaki Heavy Industries, Ltd., has been awarded an order for coal-fired power plant construction work under a full turnkey contract (including design, procurement, civil engineering work and installation work), by the State Power Development Corporation (headquartered in Manila), an independent power plant (IPP) in the Philippines. The order amounts to approximately 20 billion yen. Construction work is scheduled to commence on the 1st of December this year, and to be completed at the end of November 2006.

The coal-fired power plant for which the order has been received is to be constructed in the Phividec Industrial Complex in Cagayan de Oro City, Province of Misamis Oriental located in the northern part of Mindanao. The 210-MW power plant will have two power generation units, consisting of 105 MW coal-fired boilers, steam turbines and generators, and will include ancillary facilities such as a coal unloading dock, coal transport/storage facilities, water intake/drainage facilities and environmental equipment.

The cost of construction will amount to a total of approximately 30 billion yen, including the cost of land and the plant. Construction will mainly be funded by capital and buyer credit provided by the Japan Bank for International Cooperation and commercial banks (insurance will be covered by Nippon Export and Investment Insurance), and through project finance syndicated loans that will be set up by Kreditanstalt fuer Wiederaufbau (KfW), etc.

The Republic of the Philippines, with a population of about 80 million people, is a great power in Asia. Its total power generation capacity is approximately 7500MW, and there is a concern over shortages due to increasing electric power demands resulting from economic growth. The total power generation capacity in Mindanao in particular is currently 1000 MW, and serious electric power shortages are anticipated. An improvement in electric power generation capacity of approximately 20 percent is expected after completion of the power plant for which the order has been awarded. The power plant to be constructed is expected to contribute to solving the electric power shortage problem.

While coal is drawing attention as an inexpensive and easy-to-handle energy resource due to the world-wide availability of coal from mines that are rich in output, the emission of green house gasses which cause global warming is cited as an issue.

However, Kawasaki possesses low fuel consumption/highly efficient coal-fired power plant technology based on its longstanding experience in relation to coal-fired power plant facilities. The power plant to be constructed has a specification that sufficiently achieves the customer needs of the simultaneous meeting of energy demand and environmental burden reduction. Furthermore, in addition to the fact that Kawasaki has abundant experience in Japan and abroad with coal burning boilers, which are the core facility of coal-fired power plants, for power plants in the Philippines, the company delivered a gas turbine combined cycle power generation system in the Manila suburb of Limay, Batan Island in 1994 and 1995. The said system supplies 600 MW of electricity, which constitutes a little over 10 percent of electricity provided in Luzon.

Nissho Iwai's customer response capabilities and KHI's considerable experience and technical capability in relation to thermal power generation facilities in Japan and abroad, including the Philippines, both of which are highly evaluated, resulted in receipt of the subject order. Nissho Iwai and KHI will continue to focus on domestic and overseas energy-related facility projects with the receipt of this order as an opportunity.

Page top