WHILE the Energy Regulatory Commission (ERC) declared that they will be looking into the impact on consumers on the possible electricity cost over the $3.3-billion liquefied natural gas (LNG) deal that was forged by the country’s most influential tycoons, more and more watchdog groups have expressed alarm over the deal.
Tycoons Manuel Pangilinan, Ramon Ang and Sabin Aboitiz had entered into a deal that would see them jointly investing in two gas-fired power plants — the 1,278-megawatt Ilijan power plant and a 1,320-megawatt combined cycle power facility set to start operations this year.
It is said that the three will invest in nearly 100% of Linseed Field Corporation’s LNG import regasification terminal, which will be used to receive, store, and process fuel for the two power plants.
But energy watchdog group Power for People Coalition (P4P) said that they are concerned over the partnership, as the three will form a single entity, raising fears it would lead to higher electricity rates.
The P4P also warned that the mega energy deal between power subsidiary of San Miguel Corp (SMC), Manila Electric Co and Aboitiz Power Corp. indicates the possibility of “collusion” among the power generation firms.
“P4P is considering its options as this deal raises red flags about cross-ownership in the power industry and the possibility of collusion among power generation companies,” P4P convenor Gerry Arances said in an email sent to reporters.
“For now, P4P urges both the Energy Regulatory Commission and the Philippine Competition Commision to take action to protect the interest of consumers,” Arances stressed.
P4P said the partnership formed by the three power subsidiaries allowed Meralco and Aboitiz to acquire stakes in SMC’s LNG facilities in Batangas province which would handle imported LNG.
The partnership came just weeks after Meralco awarded 2.4 gigawatts of new power supply agreements (PSA) to power companies using imported LNG handled at SMC’s Batangas facilities.
Meralco is part of the partnership through its MGen power generating arm.
Under the partnership, Meralco would in turn acquire a 40 percent stake in the Ilijan LNG Power Plant, originally owned by SMC and Excellent Energy Resources LNG Power Plant, which would exceed shares owned by both Aboitiz and SMC.
It effectively makes Meralco, whose franchise is for power distribution, also a producer of electricity which is prohibited by the Electric Power Industry Reform Act or Epira.
“In January, Meralco gave away 80 percent of its new power requirements to these two SMC gas plants based on terms that give consumers the short end of the stick,” said P4P convenor noted.
“Now, we learn that Meralco, all this time, was intending to buy those plants, and would be directly benefiting from expensive costs of fuel passed on to consumers. This is clearly robbery in broad daylight,” Arances said.
SMC, Aboitiz and Meralco are also seeking to acquire the adjacent liquefied natural gas import and regasification terminal owned by the Atlantic Gulf & Pacific Company with Linseed field Power Corporation.
According to P4P, these moves violate the spirit of Epira that prohibits conflict-of-interest situations in the power industry and cross-ownership of generation and distribution utilities.
The law encourages competition to provide consumers with least-cost electricity and protect against abuses.
“Government authorities should put a stop to this madness,” Arances said.
“Letting SMC, Meralco and Aboitiz as they are would be a disservice to consumers,” he said.
