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Acquisition and rehabilitation of the Masinloc coal-fired thermal power plant



Acquisition and rehabilitation of the Masinloc coal-fired thermal power plant




$200.00 million



The toxic-emitting, 600-megawatt Sixteenth Power Masinloc Thermal Power Project (MTTP) in Zambales, Philippines started operating in 1998. The two-unit plant uses imported high-quality bituminous coal, which produces 385,000 tons of ash per year and releases massive amounts of carbon dioxide that is toxic to both human health and the environment.


The US$441-million project was jointly financed by the Asian Development Bank (ADB), Export-Import Bank of Japan, and the local executing agency, National Power Corporation (NPC). The Japanese bank reportedly required that NPC attain “100 percent social acceptability” before it agreed to fund the project. The ADB, meanwhile, provided risk insurance.


MTTP was primarily commissioned to provide reliable and inexpensive electricity in Luzon Island and diversify the country’s energy sources. Though the ADB approved its counterpart loan in October 1990, the project only took off in December 1994. This was due to problems concerning land acquisition, resettlement, and obtaining the much-needed environmental compliance certificate (ECC). An attached technical assistance grant aimed to improve NPC’s environmental monitoring and management capacity.


In 2002, the Bank’s Operations Evaluation Mission (OEM) report rated the project “successful”1 saying that MTTP was relevant, highly-efficacious, efficient, and sustainable. It also found the design and equipment in conformance with environmental standards while the operation and maintenance were deemed satisfactory. Unsurprisingly, the OEM said the project has had moderate environmental and socioeconomic impacts.


This was in direct contrast to a 2002 report2 by Greenpeace which revealed that fly ash samples were taken from the Masinloc Coal Power Plant and two other coal-powered plants were contaminated with a range of toxic and potentially toxic elements including arsenic, chromium, lead, and mercury.


In terms of socio-economic impacts, the project directly affected 198 families or around 1,000 individuals in Barangay Bani. It has also impacted on communities who use the Lawis River (where the plant gets water for cooling). The warm water from the cooling device goes directly into Oyon Bay. The Bank said these people were resettled in 1996, two years before the commissioning of MTTP. What the OEM failed to include in its report was the strong community opposition to the project during the project implementation period as well as the militarization of the area.


In 1994, newspaper columnist Father Shay Cullen, who witnessed some of the protests against the project recounted that that NPC was desperate to convince potential funders that the project was socially acceptable. This was while protesters gathered noisily in opposition to the project and members of the clergy led candlelit processions mourning the cutting of trees and forced relocation of residents. NPC claimed they had settled amicably with residents when, in fact, it had to file cases against the landowners and send them threatening letters.


Cullen’s earlier 19923 articles reported that the people of Masinloc strenuously objected to the project, stating that their health and that of their children will be sacrificed while their land, sea, and skies will be polluted and poisoned. They started an international letter campaign to then ADB President Kimi Masa Tarumitzu and Bank’s donor governments to stop the project. The entire clergy of Zambales also denounced the project as environmentally unsound.

The Masinloc mayor, who was initially against the project, was invited by then-President Fidel Ramos, for a meeting in Malacanang in the mid-‘90s. After his visit to the presidential palace, the mayor changed his position and stopped opposing the plant. Another report4 alleged that the mayor changed his position because he was coerced by the President. Ramos eventually used his emergency powers to build the plant to address the regularly occurring 8-hour to 12-hour blackouts in Luzon.


As of 2002, there was no longer strong community opposition. One of the old community leaders was eventually hired by the plant as its chief security officer. One of the previous youth leaders also now works for the plant.


In 2003, the ADB through the Electric Power Industry Reform Act pushed for the privatization of the Philippine power industry, including the Masinloc Coal-Powered Plant. Tasked to sell the power plant is the privatization agency, Power Sector Assets and Liabilities Management Corporation (PSALM). In 2004, the controversial plant was awarded to the winning bidder, YNN Pacific Consortium of Malaysia. The consortium, in turn, failed to put up the required down payment because it was undercapitalized and had no experience in the power industry.


In November 2005, a German Greenpeace volunteer was hit by a crowbar in the face and beaten up by armed guards of the Masinloc plant after he and other activists forced their way into the compound to stage a protest rally related to climate change. A New Zealander and some Filipinos were also injured when they were hit with stones hurled by the guards. The guards also fired warning shots. NPC denied that a violent scuffle ever occurred as it deplored the “premeditated illegal intrusion of Greenpeace activists.”

In August 2006, PSALM announced that it would re-bid the Masinloc Power Plant following the termination of its asset purchase agreement with the YNN Pacific Consortium.


Project Impacts


Coal is the dirtiest, most carbon-intensive of all fossil fuels, emitting 29 percent more carbon per unit of energy than oil and 80 percent more than gas. It is one of the leading contributors to climate change, the single biggest environmental threat facing the planet today. Furthermore, a study conducted by the European Commission in 2003 on different types of power generation bared that coal-fired power plants registered the highest external cost. External costs arise when project impacts such as damages to human health are not fully accounted for or compensated for by a power plant like Masinloc.


Ash samples taken from Philippine coal-fired power plants such as Masinloc all revealed the presence of mercury—a deadly neurotoxin, arsenic—a known carcinogen, as well as the hazardous substances lead and chromium.5 Host populations/communities, like those in Masinloc, have been exposed to such health risks. This report runs counter to the Bank’s pronouncements that the environmental impacts of MTPP are well within the limits set by the Department of Environment and Natural Resources (DENR).


Likewise, bleaching of coral reefs surrounding the coal plant in Masinloc has been reported.



When the NPC developed and implemented a resettlement program in collaboration with the Municipality of Masinloc, the Bank did not have an involuntary resettlement policy yet. This has resulted in several issues that the OEM recommended for immediate resolution. These were: (1) lack of drinkable water at the resettlement sites; (2) lack of job opportunities and reduces incomes for some of the displaced households; (3) delayed transfer of titles to affected families; and (4) disputes over compensation of amounts.


A 1999 Balik Kalikasan Online6 reported that the displaced Masinloc farmers benefited much from farming rice and mangoes before, enough to put their children through college. A provincial board member of Zambales was quoted as saying that the fruit yield dropped by 1/3 since the plant began operations. Many also grew a sustainable living from fishing. At present, their fish catch has become few and the Bangus (milkfish) have disappeared. One fisherfolk said their catch has dwindled from 50 percent to only 10 percent. Meantime, a Barangay Bani officer said MTPP failed to provide jobs, at the same time damaged Oyon Bay. They no longer have income from seaweeds which have been gradually killed by the hot water coming from the coal-fired plant.


ADB Safeguard Policy Violations


In its OEM report, the ADB admitted that coal-fired power generation generally has major environmental impacts in the form of emissions, discharge of cooling water and wastewater, and ash handling. It has emphasized though, that environment protection has been well incorporated in the project design such as various forms of emission control and monitoring that are within the standards prescribed by the DENR. The Masinloc plant reportedly tries to control the emission of sulfur dioxide and nitrogen dioxide. It is equipped with electrostatic precipitators or ESPs, which the Bank says has 99.5 percent removal efficiency.

However, fly ash samples analyzed by the Greenpeace Research Laboratory in the UK showed significant levels of mercury, which almost exclusively escapes pollution control devices. The ash from the Masinloc plant contained arsenic, lead, and chromium as well.


Fly ashes pose a potential environmental hazard due to the very large quantities produced, as well as the toxic elements they contain that leach into the immediate environment. Fly ash particles that are extremely small and are not caught by pollution control equipment pose additional dangers since they can be inhaled into the extremities of lung airways and can lead to adverse human health effects. Likewise, these “respirable” particles can even be more poisonous than fly ash as a whole. Treatment processes to reduce the quantities of these harmful elements in the fly ashes will result in the production of additional waste-streams.


Ongoing use of coal combustion for power production will result in future releases of toxic and potentially toxic elements to the environment.


Resettlement and Other Issues

The appendix section of the OEM was even more telling of resettlement problems. Further evaluation of the resettlement program exposed issues like lack of key information on social planning and income restoration, absence of legal basis in the computation of compensation, and unverified environmental impact study (EIS) of the relocation site. Moreover, the resettlement site has been found to be vulnerable to soil erosion and flooding. NPC has also failed to define the responsibilities of its offices and the affected families in planning, implementing, monitoring, and evaluating the resettlement program.

The report also downplayed the case for more compensation which was filed and won by a group of affected families against the MTPP management. NPC has filed for reconsideration, which is now being reviewed by the Philippine Court of Appeals.


With regard to the militarization of the area, a Greenpeace volunteer disclosed that soldiers were sent to harass community members even during times like Earth Day. There where times when military personnel even lived in the area, especially upon approval of the plant’s ECC. While community consultation did occur, the proponents glossed over the fact that the community opposed the plant.


Although many residents from Barangay Bani, were employed by NPC during the MTPP construction, promises of employment were unfulfilled when it started operations. Those who applied were deemed unqualified. Only a few from Barangay Bani and Masinloc were employed. The Mayor of Masinloc has had several exchanges of letters with NPC due to the non-priority of his constituents in the hiring of plant employees even for non-technical positions. The latter pointed out that 57 percent of their workers were from Zambales.

The local officials of Masinloc admitted that the Multi-Sectoral Monitoring Team (MMT) was incompetent. The MMT was established to monitor all that was related to the power plant operations. According to the Mayor of Masinloc, no real monitoring can be performed because of a lack of funds. He said the coal-fired power plant is already an obsolete technology in the western world. He added that the country must maximize inherent resources like geothermal and natural gas.


Lessons Learned

Communities hosting coal plants like in Masinloc have always ended up shouldering the massive costs and impacts created by burning coal for energy. The Masinloc coal-fired power plant has been found to produce fly ash contaminated with a range of toxic and potentially toxic elements. Despite the use of highly efficient pollution control devices such as ESPs, hazardous elements present in fly ash particles and in gaseous forms will be released to the atmosphere along with flue gases. Particles emitted to the environment either directly with flue gases, or a result of inadequate fly ash storage, pose a threat to human and animal health.

This can only be avoided through the cessation of coal combustion and the implementation of sustainable production technologies such as solar and wind-power generation. Based on a study by U.S. based-National Renewable Energy Laboratory, the Philippine wind energy source potential can supply over seven times the current power demand of the country. Similarly, the country’s abundant solar energy possesses one of the highest efficiency ratings in the world.

According to Greenpeace, there is no need to build or expand new coal-fired power capacity in the face of virtually untapped new renewable resources. The Philippine government and funding agencies such as the ADB should conduct a full-scale environmental audit of existing coal plants like Masinloc to determine the extent of risks faced by host communities, municipalities, cities, and population centers. They should also ensure that the external costs of coal are fully internalized by proponents and that preferential policy treatment favoring new renewable energy is put in place.


In terms of resettlement issues, the Bank, as well as the NPC, should adhere to some of the OEM recommendations. That resettlement should be based on a time-bound action plan of documented measures, be founded on a sound legal basis, and a cogent assessment of the pre-project socio-economic situation. That NPC should provide affected families the following: a water supply system, their long-overdue land titles, and basic market.

On the part of the ADB, it should provide more supervision on resettlement issues during project implementation and conduct monitoring on resettlement after program implementation.


  1. ADB. “Project Performance Audit Report on the Sixteenth Power (Masinloc Thermal Power) Project (Loan 1042-PHI) in the Philippines.” Manila: ADB, 2002. 

  2. Greenpeace. “Hazardous Emissions from Philippine Coal-fired Power Plants: Heavy metal and metalloid contents of fly ash collected from the Sual, Mauban, and Masinloc coal-fired power plants in the Philippines.” Greenpeace, 2002.

  3. Cullen, Fr. Shay, SSC. “Kimi Masa Tarumitzu and Masinloc Power.,” Philippine Daily Inquirer, July 14, 1992.

  4. Marasigan, Michael.“The Environmentalist Mayor.” Mobile Media, October 11, 2000.

  5. Greenpeace Southeast Asia. “Bringing Calamities to communities: Coal-Fired Power Plants and Mirant,” 2005.

  6. "Coal Nightmares”, Balik Kalikasan Online, October 1999.

  7. Interview with Danny Ocampo, Greenpeace campaigner, November 2004.

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