The country’s largest power firms, led by tycoons Manuel V. Pangilinan, Sabin Aboitiz and Ramon S. Ang, have completed a landmark $3.3-billion joint acquisition deal for a liquefied natural gas (LNG) terminal in Batangas City.

In a disclosure to the stock exchange on Tuesday, Manila Electric Company (Meralco) announced that its wholly owned subsidiary, Meralco PowerGen Corporation (MGEN), along with San Miguel Global Power Holdings Corp. (SMGP) and Aboitiz Power Corporation’s subsidiary, Therma NatGas Power Inc. (TNGP), achieved financial close for the transaction.

The agreement involves MGEN and AboitizPower’s joint venture, Chromite Gas Holdings Inc., acquiring a 67 percent stake in South Premiere Power Corp. (SPPC), Excellent Energy Resources Inc. (EERI) and Ilijan Primeline Industrial Estate Corp. The consortium also owns Linseed Field Corp. (LFC), which operates the LNG terminal.

Chromite, owned 60 percent by MGEN and 40 percent by AboitizPower, will hold the majority stake, while San Miguel Global Power retains a 33 percent share.

Scrutiny

To recall, the Energy Regulatory Commission (ERC) previously said the agreement may still face scrutiny due to potential breaches of market share limitations under the Electric Power Industry Reform Act (EPIRA).

“We’ll need to revisit our decision because we need to ensure that whoever the PCC has determined to be in control of — there are two sets of assets here: the two power plants and the terminal. So, whoever will end up controlling them we will need to revisit the power plant side compliance with our market share limitations,” ERC chairperson and CEO Monalisa Dimalanta said.

The Philippine Competition Commission (PCC) approved the deal last December. Upon approval, the PCC has imposed several conditions to prevent anti-competitive practices, requiring the acquired companies to operate independently of their parent firms with separate management, IT systems, and offices.

Power plants must report unplanned outages to the PCC within seven days, while Competitive Retail Electricity Market reports must also be submitted.

Compliance officer

The consortium is required to appoint a compliance officer to ensure adherence to these safeguards, which will remain in place for five years, with potential extensions. Violations could lead to fines of up to P2 million per day per infraction.

As outlined in the Philippine Energy Plan, LNG is crucial for the country’s energy sustainability and security. It plays an important role in boosting natural gas share in the power generation mix to 26 percent by 2040.

LNG offers significant environmental advantages over traditional fossil fuels as it reduces greenhouse gas emissions, combats climate change, improves air quality, and enhances public health — making it the ideal transition fuel to a renewable energy future.