By Danessa O. Rivera – January 17, 2016 – 12:00am
from The Philippine Star
MANILA, Philippines – AC Energy Holdings Inc. sees liquefied natural gas (LNG) facilities to become viable investments if auctioned by government under public-private partnership (PPP) development.
The LNG pipeline and terminal facilities should be offered under a single auction to attract investors because they are inter-dependent, AC Energy president and CEO Eric Francia said.
“I don’t see any economic rationale or basis, at least from where we sit in terms of making LNG and natural gas investment competitive and economically feasible,” he said.
The Department of Energy (DOE) issued last year a new policy mix, with both renewable energy (RE) and LNG having a 30-percent share each while the balance would be shared by the existing fuel sources in the country such as coal and diesel among others.
A number of players have expressed interest in putting up LNG terminals, like First Gen Corp. of the Lopez Group and Manila Electric Group, but no plans have come to fruition yet due to the high cost to put up the facilities.
The long-delayed P10.52-billion Batangas-Manila natural gas pipeline (BatMan 1) was also supposed to be auctioned under the Aquino administration flagship PPP program, however the DOE is eyeing other options to implement the project due to off-taker concerns.
Given the issues on viability and demand, Francia said government must fast track the release of an LNG master plan for the industry to flourish.
“There should be a very tangible and robust master plan. It’s not going to be easy. DOE should do the master plan since it’s policy and planning,” the company official added.
The company official noted the government-led LNG pipeline could be an enabler for the gas industry that can supply to power, automotive and industrial sectors.
“If you have a pipeline from Batangas to Manila, once you go through industrial parks, you can do a lot things like co-generation. So the economics now will change because you’re not only using it for power but also for manufacturing processes. It can also be for automotive and transportation use which links now to policy,” Francia said.
But until that happens, AC Energy will continue to develop mainly coal-fired power plants to satisfy the immediate demand for power.
“We will be active in the development in traditional coal but also other technologies. But given the fluid nature and the uncertainties in gas and RE, I cannot pin down figures (for future project capacity),” Francia said.