By Myrna M. Velasco – December 25, 2019, 10:00 PM
from Manila Bulletin
State-owned firms Philippine National Oil Company (PNOC) and Power Sector Assets and Liabilities Management Corporation (PSALM) are negotiating for the “banked gas” from the Malampaya field that could be funneled to the 1,200-megawatt Ilijan gas-fired power facility when its gas sale and purchase agreement (GSPA) will expire early part of 2022.
PNOC President and CEO Reuben S. Lista has admitted the ongoing discussion between the two firms on prospective deal for the banked gas, although he qualified that they are not limiting themselves to just PSALM as targeted buyer of the banked gas.
“We are negotiating with many parties on the banked gas. PSALM is one of them for the Ilijan plant, but we are not talking to them exclusively,” Lista stressed.
The GSPA for Ilijan is scheduled to lapse early part of 2022, but its build-operate-transfer (BOT) contract will end in July 2022 yet – so there would be several months when the government has to take responsibility on its gas fuel prior to turnover.
At the same time, there is a pending legal case relating to more than ₱19 billion worth of receivables on the Ilijan plant, which may hobble any targeted turnover of the facility to its independent power producer administrator.
The banked gas has already been set on auction by PNOC for several times, but there had been no successful sale until this time because the offers it had been getting were below targeted sale price for the fuel.
The last party that PNOC had negotiated with was with First Gen Corporation of the Lopez group, but this never progressed to a sale and purchase transaction because they were not able to agree on a price that would be acceptable to the state-owned firm.
The banked gas was 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 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 ₱14.4 billion from ₱30 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.”