Meralco strengthens portfolio in power sector

MANILA, Philippines – The Manila Electric Company (Meralco) is strengthening its portfolio by tapping more power projects.

Meralco chairman Manuel V. Pangilinan said the plan is “to build up to 3,000 megawatts (MW)” of power generation capacity.

“We are talking to a number of parties who are also interested in putting up power plants. If they require an off-taker, we must be able to invest so that we can participate in the benefits of the project,” said Pangilinan.

He declined to divulge the identities of the companies but said these are all Filipino firms.

Expanding portfolio

Currently, Meralco is involved in 3 coal power projects with a total power generating capacity of 2,255 megawatts (MW). These are the 455MW coal-fired power plant in Mauban, Quezon; the 600 MW coal-fired power plant of in Subic; and the 1,200 MW coal power plant in Atimonan, Quezon.

For its existing power projects, Meralco’s power generating arm, Meralco PowerGen, partnered with New Growth BV, a wholly-owned subsidiary of Electricity Generating Public Company Limited (EGCO) of Thailand to form San Buenaventura Power Limited Company (SBPL) for the 455MW coal-fired power plant project in Mauban, Quezon.

The 600MW power project in Subic, meanwhile, is being developed by a consortium composed of Meralco PowerGen, Aboitiz Power Corporation, and Taiwan Cogeneration International Corporation.

Pangilinan also said that Meralco and JG Summit Holdings, Incorporated are still discussing plans on possible joint power projects.

“We are in talks with them. They have a big petrochemical facility. They need to build a power plant. We are still under discussions,” said the Meralco executive.

JG Summit now owns 21.7% of Meralco, the country’s biggest power distributor after acquiring the stake of San Miguel Corporation for P72 billion.

Meralco and JG are now in exploring possible partnerships in the power sector.

JG Summit, a pioneer in the petrochemical industry, now has two wholly owned subsidiaries in its 250-hectare fully integrated, world-class, Philippine Economic Zone Authority (PEZA)-accredited petrochemical manufacturing complex in Barangay Simlong, Batangas City – the JG Summit Petrochemical Corporation and JG Summit Olefins Corporation.

LNG is cheap, yet expensive

To spread any possible risk, Pangilinan said the capital-intensive planned 1,200 MW coal-fired power plant in Atimonan would require a partnership with a foreign firm.

“We may look for a foreign partner so long as Meralco observes a majority stake,” said Pangilinan, who added that the project could cost at least $2 billion.

A liquefied natural gas (LNG) project in Atimonan was planned but it was later decided that a coal-power facility would be built instead.

“We’re still looking at possibilities on the gas side, but the reason for the shift of our focus on coal is because it’s still the cheapest source of power,” Pangilinan said.

Power produced from an LNG plant is more expensive than from a coal plant.

LNG is less costly than coal in other markets, but it is still more expensive to bring into the country because of logistics costs, Energy Secretary Carlos Jericho Petila previously said.

Besides, the government has yet to craft a master plan for LNG in the country.

For instance, Pilipinas Shell Petroleum Corporation, which is eyeing two massive LNG terminals in the country, is urging the government to create policies to encourage investments in the LNG sector.

LNG prices in the international market have also been on an upswing due to growing demand worldwide and a recent US policy aimed at cutting carbon emissions from coal plants.

Meralco’s earlier plan involved a 1,750MW LNG plant in Atimonan with Chubu Electric Power Corporation as its partner. The shelved project was expected to  be completed by 2018 to 2019. – Rappler.com