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Business

Malampaya operator told to explain supply restrictions

Danessa Rivera - The Philippine Star

MANILA, Philippines — Energy Secretary Alfonso Cusi has directed the operator of the Malampaya Natural Gas Field to explain the supply gas restrictions to gas-fired power plants which could prop up electricity prices.

“These restrictions affect the electricity prices that consumers pay and they will have to be informed on the causes of price increases,” Cusi said.

While the Malampaya consortium operator Shell Philippines Exploration B.V. (SPEX) said the gas restrictions were lifted yesterday, the Department of Energy (DOE) said higher prices could already adversely impact the consumers.

In a disclosure to the Philippine Stock Exchange yesterday, First Gen Corp. said the Malampaya consortium resumed its gas supply to the Lopez firm’s three gas-fired power plants after a fuel supply interruption last weekend.

First Gen said it was advised yesterday that the consortium would slowly start supplying gas from Malampaya to the First Gen Clean Energy Complex in Batangas. It is “hopeful that our plants can all return to gas-fired operation soon.”

Because of the interrupted Malampaya gas supply to FGCEC, First Gen said the 1,000-megawatt Santa Rita and 500-MW San Lorenzo plants have been operating using condensate as fuel while the 97-MWAvion has been using diesel, which are more expensive than natural gas.

Meanwhile, First Gen said its 414-MW San Gabriel plant “does not have dual-fuel capability and had to shut down because of the absence of natural gas supply from Malampaya.”

While the DOE already promulgated a ‘no pass-on’ provision in the 2018 CSP Policy, these contractual arrangements are covered by previous power supply contracts signed by Manila Electric Co. (Meralco).

Meanwhile, Cusi asked the Independent Electricity Market Operator of the Philippines (IEMOP) to simulate the impact on prices of the gas restrictions, as well as the upcoming Malampaya maintenance shutdown, during which period there will be no gas production scheduled from Oct. 2 to 22.

“While there is sufficient supply of electricity during this period, consumers need to know the effects of all these on their power bills,” Cusi said.

The DOE is set to call a coordination meeting with the consortium operator, natural gas power plants, Meralco and market operator, among the other industry players, to address all the issues.

It earlier said it was preparing for the impending shutdown of the Malampaya natural gas facility in October as this is expected to put an upward pressure on electricity prices.

DOE Undersecretary Felix William Fuentebella said there would be a cost impact with the Malampaya shutdown since gas-fired power plants relying on the facility’s supply would have to run on more expensive liquid fuel.

Meralco also earlier said it was expecting some upward push in the generation charge in October due to the Malampaya facility shutdown.

This as three of its power generators will be affected by the scheduled shutdown and will need to run on more expensive liquid fuel to fulfil their supply requirements.

The three plants are the 1,000-MW Sta. Rita and 500-MW San Lorenzo gas plants, collectively called the First Gas plants, and the 1,200-MW Ilijan power plant.

The power supply agreements with the First Gas plants require them to run on liquid fuel while the Ilijan baseload and mid-merit power supply agreement requires the generator to provide full capacity notwithstanding the lack of fuel.

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