Meralco still evaluating offers from First NatGas, Solar Philippines

By Lenie Lectura – February 4, 2018
from Business Mirror

A top official of the Manila Electric Co. (Meralco) will consider both offers from Lopez-led First NatGas Power Corp. and Solar Philippines Power Project Holdings Inc. for the supply of power to the country’s largest power distribution utility firm.

Meralco Chairman Manuel V. Pangilinan said the two offers, albeit different, are attractive and beneficial to the utility firm, which is diversifying its energy source mix.

“Yes, of course,” Pangilinan replied when asked if Meralco will consider both offers.

“In a way it’s different because natural gas is gas and solar is solar. It can’t be all coal; it can’t be all gas, so we’re trying to diversify fuel sources just in case, for example, if a typhoon hits a particular area then you won’t have solar power,” Pangilinan said. “So, you need to have other sources. It’s good for Meralco to diversify and so we also seen as not favoring any particular supplier of power.”

Last week Solar Philippines challenged the price offer of First NatGas to supply power to Meralco at P2.99 per kilowatt-hour (kWh).

First NatGas will source power from its 414-megawatt (MW) San Gabriel gas power plant in Batangas, while Solar Philippines, according to its president, Leandro Leviste, will utilize solar energy and battery storage.

Earlier, Solar Philippines installed the country’s first MW-scale solar-battery microgrid in Paluan, Occidental Mindoro, to provide power for an entire town at a lower cost than gas.

While Meralco’s mandate is to source the least cost—“and we take that seriously,”—Pangilinan said the utility firm must also diversify its fuel sources “because if your dependent on just a single source then that’s not good.”

He added that gas plants currently account for “more or less 35 percent” of Meralco’s fuel source.

Leviste claims Meralco consumers will save over 30 percent or an estimated P75 billion per annum if its offer is chosen. This is compared to Meralco’s average generation rate in the past three months of P4.74/kWh.

He added that consumers may save even more compared to gas plants, such as First Gas Philippines Corp.’s 500 MW, which in the past three months supplied Meralco at an average rate of P5.44 per kWh inclusive of value-added tax.

Solar Philippines’s offer comes in the wake of Meralco’s declaration of a failure of bidding in a competitive selection process (CSP), in which no company qualified to challenge the proposal of First NatGas in light of the CSP’s requirement that the fuel for the generation of the price challenger must be the same as the original power supplier, which is natural gas.

Since it was a failed bid, Solar Philippines said Meralco may now choose whether to rebid this under the same terms, or amend the terms to allow other technologies to compete on the basis of cost.

Meanwhile, Pangilinan said, “it’s difficult” to say how power supply will behave in the summer months.

“I don’t know what summer will bring and, of course, we can’t foresee any shutdowns so it’s hard to say. So far, the weather has been cooperating; it’s pretty cool so there’s not much danger there,” Pangilinan said. “If there’s an unexpected shutdown of plants, all we know is that the margins continue to be rather tight. So, in the near term, there’s nothing we can do. It takes time for new plants to be finished.”

He added that Meralco hopes to post better numbers for 2017 when it presents its financial performance soon.

“That has always been our budget,” he said, referring to a higher 2017 profit expectation.

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