MANILA, Philippines – In one of the largest deals in Philippine corporate history, the power unit of San Miguel Corporation (SMC) won the bidding for AES Philippines’ assets, including its coal power facility in Masinloc, Zambales, for nearly $2 billion.
SMC Global Power Holdings Corporation acquired both AES’ 51% stake and Thailand-based Electricity Generating PCL’s (EGCO) 49% stake in the 630-megawatt (MW) facility for $1.9 billion.
Under the name Masinloc Power Partners Company Limited, the coal facility is made up of two 300-MW units. A 3rd one is being constructed, with completion projected for mid-2019.
The facility also has the infrastructure to be able to expand by another 300 MW.
“We are happy to be able to acquire Masinloc. The additional power assets provide us an opportunity to increase our footprint in clean coal technology that provides reliable and affordable power, particularly in Luzon,” said Ramon Ang, president and chief operating officer of SMC.
“In fact, we have substantially reduced emissions even from our existing power plants to continue promoting the economy’s growth and produce energy in an environmentally responsible way,” he added.
The acquisition significantly bolsters SMC Global Power’s installed capacity, which prior to the deal stood at around 2,903 MW, representing only 22% of the Luzon grid and 17% of the national grid.
In winning the bid, SMC also topped fellow major power players Aboitiz Group and the Manila Electric Company (Meralco).
The bid was originally solely thought to be for AES’ 51% stake for around $1 billion, before EGCO decided to sell as well.
AES Corporation acquired the Masinloc power plant from the Power Sector Assets and Liabilities Management (PSALM) Corporation during its privatization drive in 2008 for $930 million.
In 2014, AES sold a 41% stake in the Masinloc project to Electricity Generating PCL for $453 million.
EGCO’s 41% stake is worth $850 million. Its president, Jakgrich Pibulpairoj, said the divestment was approved by the company’s board last November 29. He added that the transaction is expected to close in the 1st half of 2018.
The completion of the deal is subject to certain conditions, including the approval of the Philippine Competition Commission (PCC) and the final execution of the definitive agreements.
The acquisition also comes as the government is set to raise coal taxes to P50 per metric ton next year, onwards to P150 in 2019 and P200 by 2020 as part of phase 1 of the tax reform. – Rappler.com