THE SUBSIDIARIES of Manila Electric Co. (Meralco), Aboitiz Power Corp. (AboitizPower), and San Miguel Corp. (SMC) have finalized their $3.3-billion deal to build an integrated liquefied natural gas (LNG) facility in Batangas.
In separate announcements, the energy giants said that Meralco PowerGen Corp. (MGen), Therma NatGas Power, Inc. (TNGP), and San Miguel Global Power Holdings Corp. (SMGP) have successfully completed all the financial arrangements required for the deal.
MGen is the power-generation arm of Meralco, while TNGP is a wholly owned subsidiary of AboitizPower through Therma Power, Inc. SMGP is the power arm of conglomerate SMC.
Under the deal, MGen and TNGP, through their 60:40 joint venture Chromite Gas Holdings, Inc. (CGHI), will invest in South Premiere Power Corp. (SPPC), Excellent Energy Resources, Inc. (EERI), and Ilijan Primeline Industrial Estate Corp. (IPIEC).
SPPC is the owner-operator of the 1,278-megawatt (MW) Ilijan Combined Cycle Gas Power Plant, while EERI is the owner-operator of the 1,320-MW combined cycle gas power plant under construction. IPIEC is the owner of the plant sites of SPPC and EERI.
MGen and TNGP, along with SMGP, will acquire the Batangas-based LNG import and regasification terminal owned by Linseed Field Corp. (LFC), which will “process, handle, and deliver the LNG requirements of the power plants of SPPC and EERI.”
SPPC, EERI, and IPIEC were previously wholly owned subsidiaries of SMGP, said SMC.
With the completion of the transactions, CGHI will own 67% of the three firms. SMGP retains a 33% equity stake in SPPC, EERI, IPIEC, and LFC.
The financial close came a month after the Philippine Competition Commission approved the mega deal, allowing the parties to proceed with their joint acquisition of power facilities and the LNG terminal, subject to certain conditions.
In a regulatory filing last week, Meralco said it would borrow P75 billion from BDO Unibank, Inc., Bank of the Philippine Islands, and Metropolitan Bank & Trust Co., which is payable over 12 years.
Meralco Chief Finance Officer Betty C. Siy-Yap said via Viber that the credit facility is intended for the “acquisition of investments in Project Chromite” and will be drawn “within the week.”
First Grade Finance, Inc. Managing Director Astro C. del Castillo said that the landmark deal is expected to “boost the generation capacity of the two gas-fired power plants, contributing to a more stable and reliable power supply for the country.”
“However, the venture could unsettle the public and regulators as a few dominant players will control a significant portion of the energy supply,” he said via Viber.
“Regulatory oversight is critical to ensure a level playing field in the energy sector and that consumer protection measures are in place.”
Monalisa C. Dimalanta, chairperson and chief executive officer of the Energy Regulatory Commission, earlier said that the commission needs to review the LNG deal to ensure that the companies comply with market share limitations and to review power supply deals.
Meralco’s majority owner, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera
