The liquefied natural gas (LNG) import facility of Atlantic, Gulf and Pacific Company Inc. (AG&P) will supply the fuel needs for electricity generation of the 1,200-megawatt Ilijan gas-fired power facility starting next year, according to the Department of Energy’s (DOE) Oil Industry Management Bureau.
The energy department noted that since the gas sale and purchase agreement (GSPA) of the Ilijan plant with the Malampaya gas field will expire by June 2022, it will be the LNG from AG&P’s facility that will replace the gas needs of the power plant – and that is the targeted deal because the ‘banked gas’ from Malampaya would still not be available by then.
“The AG&P regasification project is expected to be commissioned at the end of second quarter of 2022 intended to immediately supply Ilijan power plant with the impending expiration of Malampaya gas supply contract,” the DOE said.
Based on the design of the AG&P regasification facility, this will have a handling capacity of 3 million tons per annum (mtpa), with the DOE noting that “Ilijan will be using around 1.5 mtpa and the rest will be available to new power plants.”
Documents would show that part of AG&P’s LNG project financing - worth P6.0 billion - had been from a term loan facility with China Banking Corporation; and the other lender is Development Bank of the Philippines.
The DOE added that the AG&P facility will start its commercial operations by second quarter of 2022, and it will be perfectly timed to the period when Ilijan plant’s gas supply contract will already lapse.
The Ilijan plant is under an independent power producer administrator (IPPA) arrangement with South Premiere Power Corporation (SPPC), a subsidiary of SMC Global Power Holdings Corporation of the San Miguel group.
With the expiration of the facility’s build-operate-transfer (BOT) contract next year, the Ilijan plant should have already been due for turnover to the SMC firm next year, but due to unresolved legal battles on ‘contractual obligations’ relating to the asset, state-run Power Sector Assets and Liabilities Management Corporation (PSALM) indicated that no talks had been carried out so far on the changeover of ownership.
Apart from the existing Ilijan plant, the AG&P gas import terminal is also targeting to supply the gas requirements of the 1,700MW combined cycle gas-fed power project of Excellent Energy Resources Inc (EERI), another energy company of the San Miguel conglomerate.
Phase 1 of that P67.86 billion power plant development at 850MW capacity is anticipated to reach commercial operation in the first quarter of 2023; while phase 2 of another 850MW will be on-line by the second quarter of 2024. Bulk of the plant’s capacity had been committed via a power supply agreement with Manila Electric Company.
SMC Global Power raised significant portion of its project funding via the issuance of senior perpetual capital securities – the first batch of which was for US$600 million in June; and additional US$150 million on September 15 this year.
In the initial round of capital raising activity, the SMC energy company engaged Credit Suisse (Hong Kong) Ltd.; DBS Bank, Mizuho Securities Asia Ltd.; Standard Chartered Bank, UBS AG-Singapore Branch as joint lead managers; while DB Trustees (Hong Kong) Limited had been the trustee; and Deutsche Bank AG-Hong Kong Branch as paying agent.
The second issuance of securities had the Standard Chartered Bank and Mizuho Securities Asia Limited as joint lead managers; DB Trustees (Hongkong) as trustee; Deutsche Bank AG, Hongkong Branch as paying agent; and Latham & Watkins as listing agent. a