Meralco eyes Osaka Gas as partner

by James Loyola, 26 February 2015
from Manila Bulletin

Manila Electric Company (Meralco) is talking to Osaka Gas for the construction of a gas-fired power plant in the country that will have a capacity of up to 1,500 megawatts at a cost of about $2 billion.

“We’re looking several joint venture opportunities with Osaka Gas. They came over. They want to build a gas plant in the Philippines,” said Meralco chairman Manuel V. Pangilinan.

He said the proposed project is “under discussion. First they have to familiarize themselves with the power industry here, they’re relatively new” but “they’re keen to invest in the Philippines.”

Pangilinan said they have yet to agree on anything but the project will likely be undertaken by subsidiary Meralco Powergen Corporation and the plant will be built in several phases with a total capacity of up to 1,500MW.

He said they estimate the cost to be at $2 billion adding that “capital cost is not that much expensive as coal. The capex is actually lower than a coal plant per megawatt. The problem is, it’s a higher cost of power, it’s a slightly higher than coal.”

For a plant of this size, Pangilinan said they will have to import liquefied natural gas as fuel since the Malampaya gas field will not have enough supply.

“We have to build a regas…import gas in LNG form, regas it and use that as fuel,” he explained. In the regas process, gas compressed into liquid form will be allowed to expand back into its gaseous form.

The plant will likely be built in Luzon where most of the demand is and where the project will have the best chance of securing offtake agreements. Pangilinan said he hopes the deal can be completed in three years.

Pangilinan said earlier that Meralco may take in a foreign partner for its coal-fired power plant in Atimonan, Quezon, the utility company’s chairman said adding that this is “so long as Meralco is obviously majority owner.”

While Meralco is capable of financing the project, Pangilinan said bringing in a partner will spread the risk of the 1,200-megawatt coal-fired power plant.

“It’s a big project at 1,200 megawatts. It will cost at least $2 billion so it’s helpful to spread the risk,” Pangilinan said.

Meralco earlier teamed up with Chubu Electric Power Corporation to build a power plant in Atimonan running on liquefied natural gas (LNG). However, Meralco had converted the Atimonan project to a coal plant in the absence of government policy support for the nascent LNG industry.

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