Tycoons partner for landmark energy deal

Iris Gonzales - The Philippine Star
Tycoons partner for landmark energy deal
This undated file photo shows an LNG facility.
BusinessWorld / File

MANILA, Philippines — Tycoons Manuel V. Pangilinan, Ramon S. Ang and Sabin M. Aboitiz have partnered for a landmark power deal that would expand the country’s liquefied natural gas (LNG) capacity, with the overall aim of improving the Philippines’ energy security.

Under an unprecedented power arrangement signed Friday night, the Pangilinan-led Manila Electric Co.’s MGen, together with the Aboitiz Group, is buying into San Miguel Corp.’s LNG entities in Batangas, including the 1,200-megawatt Ilijan natural gas power plant.

MGen and Aboitiz Power Corp. are acquiring a 67-percent stake in SMC Global Power’s Ilijan Power Plant in Batangas, with SMC retaining 33 percent, industry sources told The STAR.

Sought for comment, Ang emphasized that it is a good move for the three of them to cooperate as their partnership would build more power plants that could help secure the country’s energy needs.

“It’s a good joint venture or cooperation agreement, wherein we can provide stable power supply and, hopefully, bring down power prices,” he said.

He added that with the new partnership among three of the country’s biggest power players, electricity prices may eventually go down by P1 to P2 per kilowatt-hour.

At present, the overall electricity rate of a typical household stands at P11.9168 per kilowatt-hour.

The planned joint power venture involves plans to expand SMC Global Power’s 1,200-megawatt Ilijan plant and its 1,300-MW Excellent Energy Resources by an additional 1,200 to 1,600 MW in the next few years, according to Aboitiz Group president and chief executive officer Sabin Aboitiz.

The deal expands the tollways partnership between Pangilinan and Ang signed last year and marks the first time that SMC and the Aboitiz Group partnered in a power venture.

“We learned that in big projects, if we can have as many people as possible...We have enough power to bring the costs down,” Aboitiz said.

He added that the move is consistent with President Marcos’ goal of ensuring energy security and bringing down the cost of electricity in the country.

The three conglomerates are behind some of the biggest power companies in the country.

SMC’s power arm is SMC Global Business Power while Pangilinan-led Meralco’s power generation business is under Meralco Power Gen or MGen. AboitizPower, meanwhile, holds the power business of the Aboitiz Group.

The Department of Energy expects natural gas power plants with a combined capacity of 11,248 MW to be completed by 2030.

LNG is deemed as a “transition” fuel to help countries move away from coal-fired plants while aiming for a wider adoption of renewable energy in the long term.

Last year, Pangilinan and Ang set aside their rivalry and agreed to partner for their first tollway project, the P72- billion highway that would connect Cavite to Batangas.

The two tycoons said then that the partnership could expand to other areas, including power.

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