Malampaya consortium ends contract with Ilijan Power Plant

ilijan kepco edited

The Malampaya consortium is concluding its gas supply and purchase agreement with the National Power Corporation (NAPOCOR) for the 1,200-megawatt (MW) Ilijan gas-fired power plant.

Located in Batangas City, the Ilijan plant is currently owned by state-run Power Sector Assets and Liabilities Management Corporation (PSALM) and operated by the Korea Electric Power Corporation (KEPCO), through subsidiary KEPCO Ilijan Corporation. PSALM took over NAPOCOR’s power generation assets, including Ilijan, by virtue of Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA).

“Malampaya is indeed a crown jewel of our country and a shining example of how a public-private partnership has powered the Philippines. It continues to fuel the country with cleaner-burning natural gas; create significant, positive social impact [on] communities in Batangas, Palawan, and Oriental Mindoro; and generate direct government revenues, with over $12 billion already remitted to the government since the start of commercial operations in 2022,” Shell Philippines Exploration B.V. (SPEX) – Malampaya’s operator – said in a statement over the weekend.

With the plant’s build-operate-transfer contract ending this month, the plant will be turned over to South Premiere Power Corporation, a unit of SMC Global Power Holdings (SMCGP) – San Miguel Corporation’s (SMC) power arm. SMCGP won the bidding to become its independent power producer administrator (IPPA) during the facility’s privatization in 2010. 

Earlier, Energy Usec. Felix William Fuentebella said PSALM is preparing to turn over the plant to SMCGP. 

The liquefied natural gas (LNG) import terminal of Atlantic, Gulf, and Pacific Co. local unit Linseed Field Power Corporation is expected to supply the Ilijan plant, as well as the other projects of SMCGP. 

Malampaya’s gas supply is seen to be entirely depleted by 2027, based on data from the DOE. 

Shell currently controls 45% of the Malampaya consortium, while Udenna Corporation of Dennis Uy controls the other 45%. PNOC-Exploration Corporation owns the remaining ten percent on behalf of the government. Udenna signed a Sale and Purchase Agreement with Shell to acquire SPEX in May last year.

Last week, Enrique Razon’s Prime Infra Holdings said it was poised to get a “controlling stake” in Malampaya from Udenna, with the intention of applying for an extension of Service Contract 38, which is expiring in 2024.