MGEN eyes Meralco baseload contract for Atimonan revival

From AB Capital's The Opening Bell: Three Moves

Event

MGEN plans to bid for Meralco's 900MW baseload supply contract under a 15-year power supply agreement (PSA), which could revive its long-delayed 1,200MW Atimonan coal-fired power plant in Quezon. The project has faced regulatory hurdles and changes in fuel technology over the past decade.

View

Securing a long-term PSA is critical to making Atimonan bankable by providing contracted demand to support project financing. We note, however, that the 900MW contract covers only part of the plant's capacity. Atimonan is not in our forecasts and would represent upside optionality for MGEN if it wins the contract and proceeds with development.

Catalyst

Expressions of interest are due this week, followed by a Nov. 6 pre-bid conference and Dec. 9 bid submission deadline. The key is whether MGEN can secure the contract on terms that support the project's economics.

Action

If MGEN wins the contract, we see this as another positive catalyst for MER following the regulatory rate reset. Atimonan would provide a long-term growth opportunity, although its financial contribution would only begin in 2031.

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