‘LNG deal could lead to higher power cost’
AN environmental group expressed fears that the partnership of the Philippines’ biggest energy companies to jointly run the largest liquefied natural gas (LNG) facility in the country could result in high power costs.
In a statement issued on Thursday, the Power for People Coalition (P4P) said the “mega energy deal” between San Miguel Corp. (SMC), Manila Electric Co. and Aboitiz Power Corp. “raises red flags.”
“P4P is considering its options as this deal raises red flags about crossownership in the power industry and the possibility of collusion among power generation companies,” P4P convenor Gerry Arances said.
“For now, P4P urges both the Energy Regulatory Commission and the Philippine Competition Commission to take action to protect the interest of consumers,” he added the three major players in the country’s energy industry recently sealed a P184-billion partnership to launch an LNG facility in Batangas.
The landmark deal has been heralded as a major leap forward for a cleaner energy future.
Under the partnership, Meralco would acquire a 40 percent stake in the Ilijan LNG Power Plant, originally owned by SMC and Excellent Energy Resources LNG Power Plant, which would exceed shares owned by both Aboitiz and SMC.
It effectively makes Meralco, whose franchise is for power distribution, a producer of electricity which is prohibited by the Electric Power Industry Reform Act or Epira.
P4P said the partnership came just weeks after Meralco awarded
2.4 gigawatts of new power supply agreements (PSA) to power companies using imported LNG handled at SMC’s Batangas facilities.
“In January, Meralco gave away 80 percent of its new power requirements to these two SMC gas plants based on terms that give consumers the short end of the stick,” said Arances.
“Now, we learn that Meralco, all this time, was intending to buy those plants, and would be directly benefiting from expensive costs of fuel passed on to consumers. This is robbery in broad daylight,” he added.
Arances said that SMC, Aboitiz and Meralco are also seeking to acquire the adjacent liquefied natural gas import and regasification terminal owned by the Atlantic Gulf & Pacific Co. with Linseed Field Power Corp.
He said these actions violate the “spirit” of Epira, which sought to restructure the electric power industry by privatizing the generation, transmission, distribution, and supply of the power sector.
The P4P convenor said Epira prohibits conflict-of-interest situations in the power industry and cross-ownership of generation and distribution utilities.
It encourages competition to provide consumers with least-cost electricity and protect against abuses.
“Government authorities should put a stop to this madness,” Arances said. “Letting SMC, Meralco and Aboitiz as they are would be a disservice to consumers.”
P4P is a broad consortium of consumers, civil society and people’s organizations, fossil fuel affected and indigenous communities, faith-based groups, academe, youth, and renewable energy advocates.