Energy consumer advocacy group expresses concern over $3.3B LNG deal

Energy consumer advocacy group Power for People Coalition (P4P) on Thursday expressed concern over the $3.3 billion liquefied natural gas (LNG) deal among three of the Philippines’ most influential companies as it could lead to higher power costs.

“For now, P4P urges both the Energy Regulatory Commission and the Philippine Competition Commission to take action to protect the interest of consumers,” P4P convenor Gerry Arances said in a statement on Thursday.

Early this month, tycoons Manuel Pangilinan, Ramon Ang, and Sabin Aboitiz entered into a deal to jointly invest in two gas-fired power plants — the 1,278-megawatt Ilijan power plant and a 1,320-megawatt combined cycle power facility set to start operations this year.

The three will then invest in nearly 100% of Linseed Field Corporation’s LNG import regasification terminal, which will be used to receive, store, and process fuel for the two power plants.

Arances claimed that there could be a possibility of “collusion” among power generation companies, resulting from the deal, which would then lead to higher costs being passed on to consumers.

The ERC had earlier said it will be looking into how the deal will impact electricity costs.

The United Filipino Consumers and Commuters (UFCC) over the weekend alleged that the deal would lead to higher electricity rates.

Arances, moreover, said the deal formed by Meralco and Aboitiz to acquire stakes in San Miguel’s LNG facilities in Batangas “violate the spirit of EPIRA that prohibits conflict-of-interest situations in the power industry and cross-ownership of generation and distribution utilities.”

EPIRA or the Electric Power Industry Reform Act encourages competition in the entire power industry to ensure affordable and reliable power to all consumers in the country.

GMA News Online reached out to San Miguel, Meralco, and Aboitiz groups, but responses were not immediately available.

Meanwhile, another consumer group, Bantay Konsyumer, Kalsada, Kuryente (BK3) released a statement supporting the deal which it said could actually result in lower electricity rates. 

"BK3 supports the government’s efforts to develop the country’s natural gas sector, which is essentially geared to lower electricity prices and boost available supply in the country," the group said. 

Once fully operational, the LNG deal is seen to add over 2,500 megawatts of generation capacity to the country’s power supply, meeting the country’s energy requirements and providing support to its target to lower emissions.

"We need new projects to come in because the only way to lower rates is to put into operations additional capacities. This would not be possible if all efforts towards development are met with unproven statements and accusations meant to create controversy and hinder progress," the group added.

The LNG deal comes as the Department of Energy (DOE) aims to have renewable energy account for 50% of the generation mix by 2040.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan in September said the Philippines would need $103.6 billion or P5.8 trillion worth of investments in renewable energy projects to meet the target power generation mix by 2040.

Foreign investors or companies have been allowed to engage in the Philippine renewable energy sector after the DOE in November 2022 amended the implementing rules and regulations of the Renewable Energy Act of 2008.

The administration is also looking at amending the Electric Power Industry Reform Act to bring down the cost of electricity across the country —VAL, GMA Integrated News