Energy mix policy and pricing delay Meralco’s LNG entry

Energy Mix Policy and pricing delay Meralco’s LNG entry

The Manila Electric Co. (MERALCO)’s liquefied natural gas entry in the power sector and its project in partnership with Osaka Gas Co. could be moved back to as far as 2020 while waiting for a firm mix policy, demand and favorable pricing levels, a Meralco official said.

“The earliest LNG can come in, given the time to go through corporate and regulatory approval processes plus time to build, I think we’re talking of 2020 or further out,” Meralco president and CEO Oscar Reyes said in an interview.

The Meralco official said that LNG remains as one of the power investment thrusts of the company. However, timing would be critical in the realization of the project.

The timing would be closer to the expected exhaust of the Malampaya deep water gas – to – power project in 2022 or 2024. “It reduces the gap, it’s closer. So it’s 2020 or later,” Reyes said.

Meanwhile, with its partnership with Osaka Gas, both companies continue to do due diligence while conducting separate studies for LNG, Reyes added.

“We and Osaka, as far as we’re concerned, we’re doing our own studies,” he said. “I think we discussed with them both parties need to look at future demand-supply scenario. LNG will require very significant amount of investments in infrastructure and that infrastructure will require not an insignificant amount of capacity.”

The lack of clear energy policy and high costs are other issues halting the further development of LNG in the country, Meralco SVP and head for customer retail services and corporate communications Alfredo Panlilio said.

“The projects are being reviewed. I think all parties are reviewing. First, we don’t have an energy policy, second you if look at cost, the price levels of LNG are still a bit challenging,” he said.

The country now has 2,750 megawatts worth of generating capacity for gas – fired projects of the Lopez and San Miguel Group. New LNG capacities will be generated from the Lopez Group’s 100-MW Avion plant, and the 414 – MW San Gabriel plant in Batangas, with two more 414 MW plants.

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