By Myrna M. Velasco
The board of directors of state-run Philippine National Oil Company (PNOC) has given its imprimatur to the company management to allow submission of tenders for the banked gas that shall be lower than the Ilijan price.
In the board decision relayed to the media by PNOC President and CEO Reuben S. Lista, it was stipulated that the authorization allows “the PNOC management to enter into comprehensive discussions/negotiations below Ilijan price with its offeror and all other potential offerors.”
It added that PNOC “can conduct another round of publication without setting a specific deadline for the submission of offers.”
Such is anchored on allowing “multiple offers to come in until such time that the proposals with the most advantageous terms to PNOC is/are received.”
Lista thus noted “since we are now authorized (by the Board), so we are now preparing the guidelines for the banked gas negotiations, then we will submit it to the Board for approval.”
The PNOC chief executive indicated the first company that has been advancing interest to negotiate for the banked gas is First Gen Corporation of the Lopez group, the same company that twice made an offer in the bidding for the Malampaya banked gas – which was carved out previously from the unused gas of the 1,200-megawatt Ilijan gas-fired power plant.
The negotiating stance of PNOC, he said, will start at the Ilijan gas price at US$6.616 per gigajoule; and it could go lower up to the a level that is not going to compromise the government on targeted magnitude of proceeds from the gas sale.
Lista intimated that the previous price offers of First Gen at US$4.50 and US$3.48 per gigajoule were deemed way “too low”, hence, these were not held then as qualifying offers.
The state-run company initially priced its banked gas at US$600 million, and the proceeds it can raise from the divestment may eventually be injected as part of its equity on its grander plan of putting up a liquefied natural gas (LNG) import facility.
Lista qualified though that the sale of the banked gas will now be an entirely separate transaction from the LNG terminal project that the company is pursuing.
He, however, noted they are not in a rush into selling the banked gas because they might still have other market options even by year 2022 or beyond.
Lista said when the gas sale and purchase agreement of the Ilijan plant will expire in 2022, the banked gas may also be viably offered to South Premiere Power Corporation, a subsidiary of San Miguel Corporation that will eventually own and operate the gas plant.
“The Ilijan GSPA will expire, so we can also sell to them. There are also others coming forward putting up LNG power plants, so they would also be part of our prospective buyers. We are not rushing into selling it,” he stressed.