State-run Power Sector Assets and Liabilities Management Corporation (PSALM) is awaiting firm commitment from Philippine National Oil Company (PNOC) before deciding to advance any further discussion or negotiation on its targeted purchase of the ‘banked gas’ that can be utilized for the 1,200-megawatt Ilijan gas-fired power facility.
PSALM President Irene Joy Besido-Garcia said “we will have to await for PNOC’s confirmation that it can get its hands on the banked gas...otherwise, the parties will not consummate any sale transaction.”
She qualified that the memorandum of agreement (MOA) earlier inked by the parties had been anchored on main condition that “PNOC has to make sure first that we really will be able to get the banked gas for the Ilijan plant.”
Doubts are being raised if PNOC can still push for the extraction of the ‘banked gas’ given the anticipated depletion of the Malampaya gas field starting next year and the expiration of the project’s service contract in 2024.
And with the forthcoming changes in equity ownership as well as management operations of the Malampaya field, the responsibility over the ‘banked gas’ extraction was indicated to have been tossed already to Malampaya Energy XP Pte. ltd, a subsidiary of Udenna Corporation of businessman Dennis Uy, which will already control 90% of the project’s shareholdings once its acquisition deal with Shell will be finalized by yearend.
Based on the numbers previously crunched by PNOC, it has been targeting to rake in as much as US$750 million to US$800 million from the sale of the banked gas – the proceeds of which can eventually be re-aligned for the government-run firm’s programmed projects.
It was in January 2019 when Energy Secretary Alfonso G. Cusi has last instructed
PNOC management, through its chief executive Admiral Reuben Lista, to “submit their recommendation,” as well as their studies and options on how the State can viably unload the banked gas under its possession.
To recall, PNOC offered its banked gas for auction twice in 2018 – but divestment stalled because it was not able to fetch a tender that should have higher or have at least matched the Ilijan gas price, which was then benchmarked at US$6.616 per gigajoule.
The state-run company specified that it cannot accept an offer below the Ilijan gas price because there’s an existing policy that ties its hands to it – and that stays unless the PNOC board would decide to have it relaxed or modified.
The banked gas under PNOC’s hold had been the fuel supply originally intended for the1,200-megawatt Ilijan plant – but due to transmission constraint during the initial years of its operations, there had been accumulated gas that had been unutilized for some years.
The gas was previously under the ownership of state-run National Power Corporation (NPC), but it opted to dispose it to PNOC during the Arroyo administration within the purview of government-to-government transaction.