Major power players ink Malampaya gas supply deal

To help lower electricity costs

MANILA, Philippines —  Razon-led Prime Energy is set to supply indigenous Malampaya gas to a major Batangas power plant jointly owned by tycoons Manuel V. Pangilinan, Ramon Ang and Sabin Aboitiz.

The operator of the Malampaya gas field has signed an interim natural gas supply arrangement with South Premiere Power Corp. (SPPC), a move expected to reduce fuel costs and help ease electricity prices for consumers.

Under the arrangement, SPPC’s 1,200-megawatt (MW) Ilijan power plant will receive Malampaya gas supply from Sept. 1 this year until Feb. 25, 2027.

The deal gives SPPC greater flexibility in managing its fuel requirements as global energy markets remain volatile amid the ongoing geopolitical tensions in the Middle East.

“This demonstrates that indigenous Malampaya gas can help lower electricity costs for consumers while delivering a reliable energy supply,” Prime Energy president and CEO Donnabel Kuizon Cruz said.

Beyond supporting the operations of the Pangilinan-Ang-Aboitiz-backed Ilijan plant, the arrangement will also broaden the utilization of Malampaya gas across the Luzon grid.

“Every unit of indigenous gas that displaces imported fuel helps make electricity more affordable for Filipino households and businesses while reinforcing the country’s energy independence,” Cruz said.

Meralco customers save P4.2 billion

The supply of Malampaya gas to SPPC was among the conditions agreed upon by Pangilinan’s Manila Electric Co. (Meralco) and Razon-led First Gas Power Corp. (FGPC) in extending their power purchase agreement (PPA).

The parties agreed that FGPC, the operator of the 1,000-MW Santa Rita natural gas-fired power plant in Batangas, would share part of its Malampaya gas allocation with the Ilijan facility starting September.

This came after the Department of Energy (DOE) directed Meralco and FGPC to immediately execute the extension of their PPA under mutually agreed terms that are no less favorable to the public interest.

In its letter, the DOE described the Santa Rita plant as “among the most critically needed generation assets in the Luzon grid.”

The Energy Regulatory Commission (ERC) approved the interim extension of the Meralco-FGPC PPA on June 24, together with several rate improvement measures.

“This is actually the third extension already,” Meralco regulatory management head Jose Ronald Valles said in a media briefing.

Valles said Meralco immediately sat down with FGPC to negotiate better terms for consumers.

The talks resulted in around P4.2 billion in estimated savings during the interim extension, translating to an average reduction of P0.36 per kilowatt-hour in generation costs for Meralco customers.

“The rate that we are charging today as a result of that negotiation and extension is what the ERC has approved,” Valles said.