ERC to review $3.3 B LNG deal

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The Energy Regulatory Commission (ERC) will examine the $3.3 billion liquefied natural gas (LNG) deal by the country’s energy giants on its possible impact on consumers

In a report by the Inquirer, ERC chair Monalisa Dimalanta stated that aside from the Philippine Competition Commission (PCC) having been ordered to review the merger, the ERC would also examine whether the agreement has any effect on the current and prospective power supply agreements of the Manila Electric Company (MERALCO).

Dimalanta added that the commission is awaiting more details, specifically on the results of the recent competitive selection process (CSPs) of MERALCO, in compliance with other commission mandates.

Earlier, Power giants MERALCO PowerGen Corporation (MGen), Aboitiz Power Corporation, and San Miguel Global Power Holdings Corporation (SMGP) entered an agreement to establish the country’s first and most extensive LNG terminal as a means to support the government’s goal to secure more gas supply and guarantee energy security.

The ERC’s urge to review came after it collaborated with PCC to develop a joint task force to monitor and probe into allegations of ‘anti-competitive practices’ in the industry.

This task force was a conclusion of a 2019 agreement between the two commissions to probe into anti-competitive practices that might undermine consumer welfare.

The Institute for Energy Economics and Financial Analysis (IEEFA), however, warned that the LNG agreement does not look bright for consumers in terms of energy affordability in the country.

IEEFA energy finance analyst Samuel Reynolds said that less rivalry between major energy suppliers would reduce incentives to provide the lowest power possible.

Additionally, IEFFA noted that the country is very reliant on the import of LNG to assist its existing gas-fired power plants situated in Batangas. However, it was noted that LNG prices were volatile and had been one of the major factors in electricity rate increase.

To date, the country has two LNG terminals. The first is owned by First Gen Corporation, while the second is through Linseed Field Power Corporation, a subsidiary of the international infrastructure company Atlantic, Gulf & Pacific Co.