PNOC told to sell ‘banked gas’ to lower power rates

By Myrna M. Velasco – July 30, 2018, 10:00 PM
from Manila Bulletin

A lawmaker is nudging state-run Philippine National Oil Company (PNOC) to sell its banked gas, an asset that it just recently offered to interested parties via competitive tender.

PNOC logo

PNOC logo

In a Congressional hearing on Monday, Party-list Representative Mark Aeron H. Sambar urged PNOC “to dispose of the banked gas to lower electricity prices and for government to have funds for its projects.”

The state-owned company auctioned on July 23 the banked gas, which was placed under its charge following the consummation of a government-to-government transaction several years back.

In the July 23, 2018 bid process, it was disclosed by PNOC management that it was only able to corner “one qualifying bid,” which was affirmed to have been coming from First Gen Corporation.

That lone offer will have to be referred to the PNOC Board for specific action or next steps – depending on assessment that they will eventually be coming up with.

On the lawmaker’s prodding, he noted that “we don’t want the gas to be stranded,” noting that it becomes a worrisome precept just letting the gas resource un-extracted for even longer period.

Sambar similarly raised the government’s need for funds to bankroll projects, including the planned ventures of PNOC.

His proposal then is for PNOC to “find a balance on how to sell it (banked gas),” with calculations that power prices could potentially drop by P0.50 per kilowatt-hour (kWh) if the gas will be divested already at this point.

PNOC President and CEO Reuben Lista previously indicated that he is willing to sell the banked gas at a price lower than the Ilijan price benchmark if it will lower electricity rates for consumers.

That pronouncement will have to be re-assessed though once the PNOC Board deliberates on the pros and cons of immediately selling the gas asset or letting it stay longer in the field.

PNOC, nevertheless, is racing against time as gas production from the Malampaya field may already be at its declining pace by year 2022.

And if the gas resource won’t be extracted from the field at the end of the Malampaya gas field’s contract duration, the government may run the risk of not even selling it eventually to prospective off-takers.