The Energy Regulatory Commission (ERC) said Monday said it will look into the impact of the sale of the liquefied natural gas assets to three of the country’s conglomerates on the market share limitation requirement under the Electric Power Industry Reform Act of 2001.
ERC chairperson Monalisa Dimalanta said the agency would also review the impact of the transaction to the power supply agreements of Maila Electric Co.
This followed the recent decision of the Philippine Competition Commission, allowing Meralco PowerGen Corp., Aboitiz Power Corp. and San Miguel Corp. to proceed with their joint acquisition of two gas-fired power plants and a liquefied natural gas (LNG) terminal.
“Whoever will end up controlling them [assets], we will need to revisit on the power plant side compliance with our market share limitations. We have a limit under the EPIRA so we have to make sure they do not exceed because there are possible scenarios it will exceed and we need to address those,” Dimalanta said.
Under the EPIRA, no company or related group should own, operate or control more than 30 percent of the installed generating capacity of a grid and/or 25 percent of the national IGC.
The transaction involves MGen, the power generation arm of Meralco and Natgas Power Inc. of Aboitiz Power through their joint venture Chromite Gas Holdings Inc. (Chromite), acquiring a 67-percent equity interest in South Premiere Power Corp. (SPPC), Excellent Energy Resources Inc. (EERI), and Ilijan Primeline Industrial Estate Corp.
SPPC, EERI and Ilijan Prime are owned by the San Miguel Group.
MGen and Therma, through Chromite, along with San Miguel Power, will jointly acquire 100 percent of Linseed Field Corp. (LFC), which operates the LNG terminal in Batangas City.
MGn and Thelma, through their 60/40 ownership of Chromite, will control 67 percent of SPPC, EERI and Ilijan Primeline, while San Miguel Power retains a 33-percent stake in these three entities and gains a corresponding interest in LFC as a result of these acquisitions.
“And then the issue of the ownership of the terminal because that’s very important. That’s a key infrastructure of this type of asset. Whoever controls the terminal has to control over the fuel of that asset,” Dimalanta said.
Dimalanta said they are set to meet with the PCC on the conditions set for approving the transaction.
“There were commitments made by the parties that also involve us. So we’ll need to coordinate…So, we’re looking forward to receiving a copy of the decision of the PCC so that we can complete our evaluation of the PSA,” she said.
She said the transaction would affect two PSAs of Meralco with EERI and South Premiere Power Corp.
Key safeguards include PCC oversight of the competitive selection process (CSP) to ensure power supply agreements are awarded through a transparent and competitive bidding process. This oversight aims to prevent collusion or unfair practices.
The PCC said the acquired companies should also operate independently of their parent companies, with strict measures to separate IT systems, offices and management to prevent coordination or undue influence. Boards of directors will include independent members and internal trading units will operate independently of affiliates.
