Poor rock conditions in the divide between two watersheds in northern Luzon, Philippines are forcing Italy’s CMC to abandon mechanical tunnel boring at the Casecnan multi- purpose project. Rating agency Standard & Poor’s revealed the problem when assessing project owner CE Casecnan Water and Energy Company in late December 1999.

Cooperativa Muratori e Cementisa (CMC) in consortium with Impresa Pizzarotti as the project’s engineering, procurement and construction contractor, will now use more conventional but more labour intensive drill and blast tunnelling techniques.

Combining hydro power and irrigation, the project is sponsored by MidAmerican Energy Holdings and is being built by CMC for the Philippines National Irrigation Admin-istration (NIA). It is now seven months behind schedule and is expected to be commissioned on 31 March 2001 instead of August 2000. Its estimated cost has soared from around US$300M in 1997 to US$585M in 1999.

MidAmerican, through its 70% subsidiary CE Casecnan, has a 25-year BOT contract with NIA for the project under which dollar-denominated sales of both water and power are protected by a 70% ‘take or pay’ clause, regardless of water availability.

The project will divert water southwards from the Casecnan and Denip rivers in northern Luzon through 29km of tunnels to a new 150MW power plant in the central Luzon valley. The water will increase irrigation supplies in the valley.

CMC began work on the main 23km tunnel in 1997 with one tunnel boring machine. As friable rock conditions slowed progress, it subsequently brought two more borers to site. Tunnelling continued to fall behind schedule, prompting MidAmerican to amend its EPC contract with CMC in late 1999.

Under this agreement CMC will replace site management and use drill and blast techniques instead of boring, rating agency S&P says. CMC still assumes construction risk under a fixed price, turnkey, date-certain contract that raises liquidated damages to US$125,000 per day from US$65,000. The contract is also reported to contain key milestone dates which, if missed, will allow Mid-American to replace CMC.

Project engineers Stone and Webster believe that the new contract is feasible, because the river diversion works, underground power house and the supply and installation of 2x75MW turbine generators are largely on schedule.

The project was launched by California Energy, which held a 70% equity in CE Casecnan Water & Energy Company. California Energy was acquired by MidAmerican in 1999.