Stock Commentary

San Miguel, Meralco, Aboitiz Power to team up on P185-B LNG facility

Merkado Barkada
San Miguel, Meralco, Aboitiz Power to team up on P185-B LNG facility

Three of the country’s wealthiest and most influential players in the power industry will team up to develop an integrated liquefied natural gas (LNG) power plant in Batangas [link]. The deal will see MGen, the Meralco [MER 379.80, down 2.6%] subsidiary that recently acquired SP New Energy [SPNEC 1.10 unch] from Leandro Leviste, and Aboitiz Power [AP 37.30, up 0.8%] invest in San Miguel Global Power Holdings (SMBP), a subsidiary of San Miguel [SMC 104.00, up 1.9%]. Through the capital pooled at SMBP, the trio will execute a roadmap of development and acquisitions with the end goal of building a facility with over 2,500 MW of capacity with its own LNG import and regasification terminal. Once operational, the facility is expected to provide over 2,500 MW of capacity.

MB bottom-line: The exact steps of this plan aren’t fully clear, but one thing stood out to me as I read through the press releases and news clippings on the formation of this Philippine megazord of oligarchs: the Lopez Family and its LNG-titan, FirstGen [FGEN 19.72, up 2.6%], were not invited to the zord-formation party. What does this mean going forward? I’m not sure. We need more power generation, more power transmission, and better power distribution, so at this point, “more” of anything is good and isn’t likely to take away (substantially) from any other group. Big picture, it looks to me like the incentives for expanding our power generation base are working, but I’m more concerned with the transmission side of it all. Transmission is controlled by the National Grid of the Philippines Corp. [SGP 9.11, up 1.2%] monopoly, and while there’s been a lot of noise made by Maharlika Fund representatives about pushing cash into NGCP to bolster the transmission network, we haven’t seen anything yet.



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