STEEL Asia Manufacturing Corp. is confident despite the Philippines’s high electricity rates, the country’s largest rebar manufacturer said it can maintain competitiveness due to use of renewable-energy (RE) sources.
Steel Asia Vice President for Corporate Communication Ma. Teresa Pacis assured the manufacturer’s use of low energy-consumption technology ensures power costs don’t impede competitiveness.
The company’s five steel mills—two in Luzon, one in the Visayas and two in Mindanao—consume more than 30 million kilowatt-hours (kWh) a month. Nearly three-fourths of that comes from RE sources, particularly geothermal and hydropower, Steel Asia said in a statement.
That compares with the 1.7 billion kWh consumed by both residential and industrial users in Cebu in 2015, according to data from the National Economic and Development Authority. With its demand profile, Steel Asia said it is able to negotiate for competitive rates.
Among the mechanisms the company said it has maximized is the “time-of- use pricing”, which reflects the cost of electricity at any particular time of the day.
The company’s rebar mills operate around the clock and use electricity with minor fluctuations. Its recycling plant operates and consumes power during off-peak hours to avoid grid system peak demand.
Pacis said that, while power remains a huge component of manufacturing costs, “our experience shows that this is not a hindrance to growth”.
“There are many ways to achieve efficiency in business operations, aside from cheap power rates or fuel costs,” she said. “Our experience has shown that power is a cost parameter that can be continually improved.”
Steel Asia supplies the country with some 2 million tons of rebar annually. It is currently expanding to integrate upstream with an additional 1.7 million tons of steelmaking capacity and 3 million tons of rolling mill capacity to produce rebar and import substitute products, such as beams, channels, wire rods and merchant bars. The company, nevertheless, admitted its overall generation charge increased this October by P0.1777 per kWh, from P4.5378 per kWh in September to P4.7155 per kWh this month. The increase, according to Steel Asia, is primarily due to the completion of the 2014 to 2016 Manila Electric Co. (Meralco)-petitioned refund in the previous month, which lowered the September generation-charge rate compared to the October generation charge.
Cost of power from power-supply agreements (PSAs) and independent power producers (IPPs) registered slight increases due to higher fuel prices and lower average plant dispatch, respectively. The shares of PSAs and IPPs to Meralco’s total requirements stood at 43 percent and 45 percent, respectively.
