lucky rainbow 3 tycoons’ Batangas liquefied natural gas venture all set

MANILAlucky rainbow, Philippines — Power firms of tycoons Ramon Ang, Manuel V. Pangilinan and Sabin Aboitiz announced the completion of financing for their landmark $3.3-billion deal to build an integrated liquefied natural gas (LNG) facility.

In separate disclosures on Tuesday, Meralco PowerGen Corp. (MGen), the subsidiary of power distributor Manila Electric Co., San Miguel Global Power Holdings Corp. (SMGP) and AboitizPower’s Therma NatGas Power Inc. (TNGP) said they had achieved the financial closing for the “first and most expansive” LNG facility in Batangas province.

Philex Mining president and CEO Eulalio Austin Jr. said they have an application to explore a nickel tenement adjacent to the firm’s site in Zambales.

Once fully operational, the LNG facility will augment the country’s power supply and promote “cleaner” energy.

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READ: PCC green lights $3.3-B LNG facility, with conditions

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Analysts said this significant investment in the power sector would benefit not only all parties involved but also Filipino consumers as they are assured of stable supply and lower electricity prices.

“This deal represents a massive investment in our country’s energy infrastructure that hopefully translates to lower energy prices. The government clearly recognizes the importance of LNG in diversifying the country’s power supply and ensuring energy security, and this new joint venture will play a major role in achieving those goals,” Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said in a Viber message to the Inquirer.

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“Overall, we view the deal positively, both in terms of its contribution to the involved parties’ market power and bottom lines, and its implications on the country’s energy security,” AP Securities Inc. research head Alfred Benjamin Garcia told the Inquirer in a Viber message.

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Colet said the LNG deal would translate to SMGP’s improved balance sheet and the availability of resources for its other investments.

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For his part, Garcia said San Miguel gained access to capital to further expand the Ilijan Complex and build the LNG plant after joining hand with AboitizPower and MGen.

“On the other hand, the investment is immediately earnings-accretive for AP and MGen and significantly boosts their attributable capacity,” he added.

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The multibillion-dollar partnership forged by energy titans involves MGen and TNGP, through Chromite Gas Holdings Inc. (CGHI) owning a 67 percent stake in three entities under SMGP.

These are South Premiere Power Corp. (SPPC), which operates the 1,278-megawatt Ilijan Combined Cycle Gas Power Plant; Excellent Energy Resources Inc. (EERI), which constructs the 1,320-MW combined cycle gas power plant and Ilijan Primeline Industrial Estate Corp. (IEPC), the owner of the plant sites run by SPPC and EERI.

In addition, CGHI and SMGP jointly acquired Linseed Field Corp. (LFC), operator of the import and regasification of LNG terminal in Batangas City.

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LFC is the local entity of global infrastructure firm Gulf & Pacific Co., which will supply the LNG requirements of SPPC and EERI power plants.

As a result of this transaction, SMGP retains a 33-percent equity interest in the three companies it previously controlled while MGen and TNGP will own 67 percent.

The Philippine Competition Commission approved the LNG deal among major energy players last December, subject to certain conditions meant to prevent collusion and unfair practices that they must comply with over a five-year period.

Aside from providing key safeguards to ensure transparency and impartiality, the PCC also ordered MGen, Meralco and SMGP to operate independently and include independent members in the boards of directors.

The Energy Regulatory Commission (ERC) said earlier a separate review of the deal would be conducted to gauge its impact on market share limitations.

Under the Electric Power Industry Reform Act, no firm or related organization can own, operate, or control more than 30 percent of the installed generation capacity of a grid and 25 percent of the national installed generation capacity.

The companies, which announced the landmark agreement in March last year, said the planned facility would be used to receive, store and process LNG for the two power plants that supply electricity to the main island of Luzon.

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Meralco had tapped loans worth P75 billion from BDO Unibank Inc.lucky rainbow, Bank of the Philippine Islands and Metropolitan Bank and Trust Co, payable in 12 years, to finance investments and other general corporate purposes. INQ

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