No commitment from Malampaya gas on planned ‘fuel swap’

malampaya pna

The proposed “fuel swap arrangement” aimed to bring back the 1,200 megawatt (MW) Ilijan power plant to operations cannot be concluded as there was no definitive gas supply from Prime Energy, the operator of the Malampaya Gas Field. 

In a report by the Manila Bulletin, MERALCO first vice president and head of regulatory affairs Jose Ronald Valles said that prior to the direction of the Department of Energy (DOE), they have discussed the fuel-swapping agreement with First Gas, Prime Energy, and San Miguel Corporation, 

Valles was hoping that they would come up with an agreement “that will address the insufficiency in the requirements brought about by the 670 MW injunction by the court of appeals. 

However, Valles said that they failed to close the deal until now and that they’re looking for an alternative solution. 

The CA injunction issued in January stopped the supply of Ilijan to MERALCO based on the original fixed-price contract. 

MERALCO is currently working on the procurement of the additional 180-MW baseload and 300-MW peaking capacities through a competitive selection process (CSP). 

Back in December, MERALCO said that it has initiated talks with First Gen Corporation for it to share a portion of its Malampaya banked gas to the Ilijan plant – owned by South Premiere Power Corporation (SPPC). 

The crucial part of the discussions was the volume of gas that Prime Energy can commit for the fuel-swapping deal, as well as the cost impact on consumers if First Gen would resort to importation of more liquid fuel for it to share its banked gas to the Ilijan facility.

MERALCO said that until the two factors are resolved, a decision cannot be firmed up on the proposed fuel-swapping pact. 

The DOE is looking at 12 possible yellow alerts for the entire year, which includes the entire month of May. 

The involved power stakeholders first came up with the gas-swapping agreement to help mitigate brownouts in the coming summer months. 

The Ilijan power plant has been on shutdown since June 2023 following the expiration of the build-operate-transfer arrangement between the government and SPPC.