WHY is a Bataan ‘Energy City’ being eyed?

PNOC, private sector consortium lay project groundwork

A joint venture between the state-run Philippine National Oil Co. (PNOC) and a private sector group that includes businessman Manuel V. Pangilinan is set to build a $2.4-billion liquefied natural gas (LNG) terminal in Limay, Bataan, that will also serve as a special economic zone.

Dubbed “Energy City,” the proposed project will be bankrolled by a consortium that includes Pangilinan, the Grego- rio Araneta Inc. holding firm, and Japanese industrial giant Mitsui and Osaka Gas. The facility will be built on a nearly 500hectare property owned by PNOC near the existing refinery of Petron Corporation.

Once fully operational, the facility will host a 1,600megawatt power plant that will be powered by LNG—the output of which will be sold under an offtake deal with Meralco as well as the power-intensive industrial players expected to locate their operations in the integrated special economic zone.

“Energy City will provide long-term energy security for the Philippines, providing the cornerstone for a clean and cost-efficient source of fuel,” according to briefing materials on the project obtained by the Inquirer.

Negotiations are ongoing between PNOC and the private sector proponents, although the Energy City proposal was first brought before the government agency as early as a decade ago during the term of President Arroyo.

The proposal is banking on the environmental benefits of using LNG—a clean-burning source of electricity—for the power plants whose total capacity can be scaled up to 2,000 MW once demand from the growing Philippine economy increases.

Proponents are also betting that the project’s proposed location inside a cove in Bataan across Manila Bay will make it an ideal site for the LNG facility while giving prospective locators easy access to the capital city. The site, which is protected from rougher waters of the South China Sea, also makes it ideal for handling the fuel shipped in from overseas via LNG tankers.

“The concept for Energy City is an integrated LNG import terminal, LNG storage facility, re-gasification plant, power generation facility, colocated industrial operations and a countrywide natural gas distribution network,” the briefing documents said.

In their negotiations with Energy Secretary Alfonso Cusi and PNOC chief Ruben Lista, the proponents, which include businessman and Araneta Properties chair Gregorio Araneta III, have indicated that the project could start immediately and that funding was ready once regulatory approval has been received.

The first phase of the multibillion-dollar energy project will be ready for operations by 2020, the documents showed, adding that the facility was “consistent with the PNOC mandate to ensure stable power supply in order to sustain the growth of the economy and the well-being of the nation.”