Landmark power joint venture to cost $3.3 billion

March 4, 2024 | 12:00am

MANILA, Philippines — Energy powerhouses Meralco PowerGen Corp. (MGen), Aboitiz Power Corp. and San Miguel Global Power Holdings Corp. (SMGP) have forged a $3.3-billion deal to help boost the country’s energy security and make affordable power accessible to more consumers.

The three companies, led by tycoons Manuel Pangilinan, Ramon Ang and Sabin Aboitiz, are launching the country’s first and most expansive integrated liquefied natural gas (LNG) facility in Batangas, a landmark development for the Philippine energy sector.

With over 2,500 megawatts (MW) of generation capacity once fully operational, it will substantially bolster the country’s power supply.

As earlier reported by The STAR, MGen and AboitizPower will jointly invest in SMGP’s two gas-fired power facilities, namely the 1,278-MW Ilijan power plant and a new 1,320-MW combined cycle power facility expected to start operations by the end of the year.

UBS AG served as the financial adviser to MGen and AboitizPower on the transaction.

Together with SMGP, the companies will invest in almost 100 percent of the LNG import and regasification terminal owned by Linseed Field Corp., a local unit of Atlantic, Gulf, and Pacific Co. (AG&P).

The three power giants will likewise acquire Linseed’s LNG import and regasification terminal, which will be used to receive, store and process LNG fuel for the two power plants.

The move will fully integrate the local energy sector into the global natural gas supply chain.

Described by Pangilinan as “a pathbreaking venture,” the initiative is seen to not only help boost Philippine energy security but also steer the country toward a cleaner and more sustainable future in line with the administration’s push for more natural gas in the energy mix.

It is also expected to make competitively priced power accessible to a broader base of Filipino consumers.

“Apart from transforming the energy landscape of the Philippines, this symbolizes a milestone alliance among major players in the energy industry toward a more sustainable future. We are thrilled to have such reliable partners as we lay the foundation for a brighter, greener future,” Pangilinan said.

Ang, for his part, said this is the first time three leading power companies are working together to secure the country’s energy needs while transitioning toward cleaner power sources.

“This represents a major leap forward for our energy future, ensuring not just reliability but also cost-efficient power for many Filipinos,” he said.

Aside from meeting the country’s energy requirements, the partnership among the three companies also supports environmental objectives by significantly lowering emissions.

The deal aligns with the government’s push toward diversifying energy sources through the increased use of cleaner natural gas.

LNG is considered as an important source for fuel diversification by the government, with its entry as a new type of fuel into the energy mix seen to increase diversity and security of the country’s energy needs.

LNG is also seen to provide the country with fuel and technology that allows flexibility in supporting the various grid demands from baseload to providing reliable mid-merit to peaking power supply.

Given LNG’s crucial role for the country’s energy sustainability and security, the Department of Energy is currently eyeing to raise the share of natural gas in the power generation mix to 26 percent by 2040.

“Both LNG and renewables are needed to achieve a balanced energy mix and well-planned energy transition. Above all, this is a big win for the Philippines and the people. Economic development is impossible without energy security, and this investment is a definitive step forward in that direction,” Aboitiz said.

Through their combined expertise and resources, MGen, AboitizPower and SMGP are assuring the delivery of dependable and competitively-priced energy while helping boost economic growth and environmental preservation.