MERALCO PowerGen Corp. (MGen) of Manila Electric Co. and Therma NatGas Power Inc. (TNGP) of Aboitiz Power Corp. signed an investment agreement to acquire Chromite Gas Holdings Inc. (CGHI) that will pave the way for their investment in liquefied natural gas (LNG) assets valued at $3.3 billion.
CGHI intends to invest in two gas-fired power plants owned by San Miguel Global Power Holdings Corp. (SMGP)–the 1,278 megawatt (MW) Ilijan power plant and a new 1,320-MW combined cycle power facility that is under construction.
Meralco and Aboitiz Power confirmed the plan to the Philippine Stock Exchange on Monday.
Meralco said its power subsidiary Meralco PowerGen Corp. would acquire 60-percent interest, while TNGP would get the balance of 40 percent in CGHI. TNGP is a wholly-owned subsidiary of AboitizPower through Therma Power Inc. (TPI).
“Together with SMGP, CHGI will invest in the LNG import and regasification terminal owned by Linseed Field Corp.,” MGen said.
AboitizPower said CGHI would acquire a 67-percent equity interest in the LNG assets, while SMGP would own the remaining 33 percent.
“Together with SMGP, CHGI will invest in the LNG import and regasification terminal owned by Linseed Field Corp.,” the parties said.
AboitizPower said gas-to-power generation is considered a natural complement to variable renewable energy, especially if the aim is to maintain grid stability and strengthen energy security.
It said LNG-powered turbines are able to quickly ramp up or down the quantity of its generated electricity to complement the inherent intermittencies of renewable energy.
“In an energy transition characterized mostly by the influx of variable renewable energy, the inclusion of LNG plants supports our pragmatic approach. As a transition fuel, LNG will complement the variabilities of solar and wind power generation, helping maintain the stability of the aggregate supply and the whole power system,” said AboitizPower president and chief executive Emannuel Rubio.
The company said the natural gas-to-power facility would also help support and sustain economic growth as it needs stable and reliable electricity.
Peak power demand in the Philippines is projected to increase annually by 6.6 percent from 2020 to 2040.
“We are pleased to continue to diversify our generation portfolio and increase our capability in the delivery of energy security in the Philippines through a minority share in the first integrated LNG facility in the country. Its importance in keeping the lights on cannot be understated,” said Rubio.