Three tycoons sign $3.3-billion energy deal

Ramon Ang Manuel Pangilinan Sabin Aboitiz—PHOTO FROMABOITIZ WEBSITE

Ramon Ang, Manuel Pangilinan and  Sabin Aboitiz—PHOTO FROM ABOITIZ WEBSITE

In a surprise move, the country’s three power giants have forged a $3.3-billion (P184.89 billion) deal to jointly launch the Philippines’ “first and most expansive” liquefied natural gas (LNG) facility in Batangas province to boost energy security and promote “cleaner” energy.

Meralco PowerGen Corp. (MGen), Aboitiz Power Corp. and San Miguel Global Power Holdings Corp. (SMGP) announced their landmark agreement on Sunday morning.

“For the first time, three leading power companies are working together to secure our country’s energy needs while transitioning toward cleaner power sources,” SMGP chair and president Ramon Ang said in a statement. “This represents a major leap forward for our energy future, ensuring not just reliability but also cost-efficient power for many Filipinos,” he added.

Under the deal, MGen, led by businessman Manuel Pangilinan as chair, and AboitizPower will invest in SMGP’s 1,278-megawatt (MW) Ilijan gas-fired power plant and a new 1,320-MW facility slated for completion by the end of the year.

The three companies will then acquire nearly 100 percent of the LNG import and regasification terminal owned by Linseed Field Power Corp., a local unit of global infrastructure firm Atlantic, Gulf & Pacific Co. that received the country’s first LNG cargo delivery in April 2023.

According to the companies, the facility will be used to receive, store and process LNG for the two power plants that supply electricity to the main island of Luzon.

Swiss banking firm UBS AG served as the financial adviser to MGen and AboitizPower for the transaction, according to power utility giant Manila Electric Co. (Meralco).

Additional power supply

“This is a pathbreaking venture,” Pangilinan said. “Apart from transforming the energy landscape of the Philippines, this symbolizes a milestone alliance among major players in the energy industry toward a more sustainable future.”

It is also meant to support the Marcos administration’s push for LNG, a fossil fuel that environmentalists claim emits nearly as much carbon dioxide as coal, as a transition fuel in the country’s renewable energy journey.

Once fully operational, the LNG facility is expected to augment the country’s power supply with over 2,500 MW of generation capacity.

READ: US offers to fund major PH energy, infra projects

“Both LNG and renewables are needed to achieve a balanced energy mix and well-planned energy transition. Above all, this is a big win for the Philippines and the people,” AboitizPower chair Sabin Aboitiz said.

With tight electricity supply still expected this year especially due to the El Niño weather phenomenon, key industry players have placed their bets on the Ilijan power plant to help meet demand.

The facility went offline on June 5, 2022, due to a stop in supply deliveries from the Malampaya gas field in offshore northwest Palawan province.

A year later, conglomerate San Miguel Corp. resumed operations following the LNG delivery in April 2023.

Energy mix

Industry estimates show that power demand in the country is expected to grow by 6.6 percent from last year’s 17,000 MW.

Data from the Department of Energy (DOE) as of August 2023 showed that natural gas accounted for 13 percent of the Philippines’ installed power capacity, with nearly half of it still contributed by coal.

The DOE aims to increase the share of renewables in the country’s energy mix from the current 22 percent to 35 percent by 2030 and to 50 percent by 2040.

The National Economic and Development Authority estimated that the country will need investments totaling P5.8 trillion in renewable energy projects to meet the 2040 target. INQ