The Energy Regulatory Commission (ERC) is scheduling next week the deliberations on the deferred cost recoveries of liquefied natural gas (LNG) that First Gen Corporation had utilized for electricity generation at its gas-fed power plants in Batangas.

As full pass-on of LNG costs had not been allowed by the industry regulator since March, it was gathered that the unrecovered charges of First Gen already accrued to more than P2.0 billion to-date.

First Gen has a tie-up with Japanese firm Tokyo Gas Co. Ltd. in its LNG venture in the country - and for foreign investors like them that are used to operations in efficient and commercially viable markets, such case of stifled cost recoveries and tricky regulatory regime end up to be a very frustrating sphere for them to navigate.

According to ERC Chairperson Monalisa C. Dimalanta, the LNG cost recoveries of First Gen “are not approved yet, but (it) is already scheduled for deliberation.”

She qualified that “schedules moved because of the work suspensions” after typhoon Carina had knocked down Metro Manila due to massive flooding, hence, the new timeline being eyed by the ERC for its deliberations will be next week.

After four-months of delayed cost recoveries, even off-taker Manila Electric Company (Meralco) is already sounding off worries on high probability that First Gen and its Japanese-firm partner may already halt LNG procurements; and any move to shift to liquid fuels will result in higher electricity rates burden to the consumers.

The utility firm noted that if the pass-on of full LNG charges would continue to be restrained, they fear that First Gen may no longer buy LNG, and may just use liquid fuel or condensate as an alternative, but that will trigger hike in the electric bills of ratepayers.

Due to the long-anticipated decline of gas production from the Malampaya field, the Department of Energy (DOE) aggressively solicited investments for LNG storage facilities in recent years – primarily to satiate the country’s gas needs.

Correspondingly, First Gen and Tokyo Gas had been among the tandem of serious investors which funneled substantial capital for a floating storage and regasification unit (FSRU) that is now solidly supporting the country’s LNG importation – and that facility, in particular, had also been certified as ‘energy project of national significance’ (EPNS) by the DOE.

In the state visit of President Marcos in Japan last year, the LNG venture of Tokyo Gas was also highlighted among the investment gains cornered by the Philippine government – but as it stands today, the foreign investors cannot fully comprehend why they are reaping headaches and financial distress instead of prudent return on invested capital.

Amid the wobbly and very erratic power supply situation in the country, any unwarranted obstruction on fuel procurement for electricity generation will just worsen the predicaments of consumers – not just with unreliable electricity service but also with higher electricity rates.

Gas is also being aligned as the perfect technology coupling to variable renewable energy (RE) installations given its flexibility for ramp up and down on its generation run, hence, it is typically vouched on as the perfect transition fuel for the long term quest of clean technology-leaning energy security in the Philippines.