By Myrna M. Velasco – August 6, 2018, 10:00 PM
from Manila Bulletin
State-run Philippine National Oil Company (PNOC) is opting to rebid its “banked gas” following the last round of auction that just cornered a solo tender.
A source from the company noted that the rebid plan was a matter it referred to the PNOC Board on its special meeting last Friday (August 3).
If that targeted next auction will fail anew, that is the only time that the state-owned firm will consider entering into a “negotiated deal” with interested parties.
“Depending on the outcome of the rebid plan, we can move on next to negotiate with willing buyers,” the source stressed.
PNOC indicated that it got a relatively marginal price in the last bidding; way lower than the Ilijan gas price which is at the range of US$6 to US$7 per million British thermal unit.
It was gathered that the company has not amended the previous memorandum yet setting the sale price of the banked gas to that of the Ilijan cost; hence, the management has its hand tied when it comes to the level of offers it shall be accepting.
Prospective buyers are nevertheless pointing out that if the gas will be sold at a high price, it may not be burned for electricity generation after all – given the very competitive electricity tariffs in the Wholesale Electricity Spot Market (WESM) now.
The banked gas is from the ‘unused fuel’ of the Ilijan plant at the start of its commercial operations in 2002 – with the transmission system then having constraint on wheeling capacity to the grid.
It was under a gas sale purchase agreement (GSPA) between the Malampaya consortium led by Shell Philippines Exploration B.V. and state-run National Power Corporation, the latter being the capacity off-taker of the Ilijan plant.
Through a government-to-government transaction during the Arroyo administration, NPC sold the banked gas to PNOC at a price half its original value to P14.4 billion from P30 billion.
PNOC has since then been attempting to sell the banked gas, but even in the auction undertaken by the last administration, it was just cornering “basement price offers.”