MVP, Aboitiz, RSA seal LNG deal

A financial close has been reached for the joint acquisition deal involving the country’s largest power companies, owned by prominent tycoons Manuel V. Pangilinan, Sabin Aboitiz, and Ramon S. Ang, for a liquefied natural gas (LNG) terminal.

In a statement last week, Manila Electric Company (Meralco) announced that its subsidiary Meralco PowerGen Corporation (MGEN), along with San Miguel Global Power Holdings Corp. (SMGP), and Aboitiz Power Corporation through its subsidiary Therma NatGas Power Inc. (TNGP), have completed the financial close of their USD3.3-billion partnership.

The agreement involves Chromite Gas Holdings, Inc. (CGHI) acquiring a 67 percent stake from SMGP in South Premiere Power Corp. (SPPC), Excellent Energy Resources Inc. (EERI), and Ilijan Primeline Industrial Estate Corp. (IPIEC). Chromite is a joint venture between MGEN and TNGP, with a 60-40 percent split.

Along with the acquisition of the 67 percent stake, Chromite and SMGP will also acquire 100 percent of Linseed Field Corp. (LFC), which will operate an LNG terminal in Batangas City.

As a result, MGEN and TNGP, holding a 60-40 stake in CGHI, will own 67 percent of SPPC, EERI, and IPIEC. SMGP will retain a 33 percent share in these entities and will gain a corresponding interest in LFC.

In December of the previous year, the Philippine Competition Commission (PCC) granted its approval for the acquisition.

The PCC emphasized that the deal is crucial for strengthening the country’s energy supply while implementing conditions to promote fair competition and transparency.

Despite the approval, the PCC raised competition concerns during its review, particularly risks of coordination in the national power generation market and potential foreclosure in power supply deals with distribution utilities.

To address these concerns, the companies involved submitted voluntary commitments aimed at ensuring market fairness.

The commitments were scrutinized and validated with input from industry stakeholders, the Department of Energy (DOE), and the Energy Regulatory Commission.

Safeguards include the PCC overseeing the competitive selection process to prevent collusion, requiring the submission of unplanned outage reports to the PCC, and appointing a competition compliance officer to monitor adherence to the commitments.