The Department of Energy (DOE) has directed its personnel to conduct physical inspections on the delays in the liquefied natural gas (LNG) facilities, which has been causing electricity rate increases passed on to consumers, Undersecretary Felix William Fuentebella said.
While the project sponsors, namely First Gen Corporation and Atlantic Gulf & Pacific Company (AG&P), have submitted revised timelines for their operations, the DOE aims to independently validate these timelines to ensure their feasibility.
In a report by the Manila Bulletin, Fuentebella emphasized that there has already been a one-year delay during this administration alone, prompting the need for closer scrutiny.
The Linseed offshore LNG import terminal operated by AG&P began its operations in June, but intermittent availability raised concerns about potential technical issues, which the DOE aims to investigate.
The DOE has already conducted inspections of the Linseed LNG terminal on October 5, with the next inspection scheduled for the First Gen facility.
The recent increase of P0.42 per kilowatt-hour (kWh) in the Manila Electric Company’s (MERALCO) electricity rates has been largely attributed to gas supply deficiencies due to ongoing production restrictions in the Malampaya field, compounded by the delayed commercial operations of the LNG import facilities.
Fuentebella acknowledged that the shift of gas plants to liquid fuels, primarily diesel, and condensate, could raise the generation charge for affected distribution utilities.
MERALCO, in particular, holds contracts with all five gas plants in the country. The unavailability or inadequacy of gas fuel places affects its supply portfolio, especially during periods of gas restrictions at Malampaya.
The aggregate capacity of the gas plants stands at 3,211 megawatts, including the 1,200MW Ilijan facility of the San Miguel group, the 1,000MW Santa Rita, 500MW San Lorenzo, 414MW San Gabriel, and the 97MW Avion gas plants of First Gen. The availability of LNG import facilities could alleviate the challenges in sourcing power supply, as LNG is considered a more cost-competitive alternative to liquid fuels for gas-fed generating facilities.
Fuentebella is hopeful that companies will take appropriate measures to avoid further delays, not only in the case of LNG facilities but also for gas-powered plants.
