Tycoons get PCC nod for $3.3 billion LNG deal

MANILA, Philippines — The Philippines’ drive toward energy security and sustainability has received a major boost as the joint power venture among three of the country’s biggest tycoons moves a step closer to completion.

The Philippine Competition Commission (PCC) has approved the $3.3-billion liquefied natural gas (LNG) deal among tycoons Manuel V. Pangilinan, Ramon Ang and Sabin Aboitiz, a landmark development expected to bring down power costs.

The deal, first reported by The STAR, involves Pangilinan-led Meralco PowerGen Corp. (MGen) and Aboitiz-owned Therma Natgas Power Inc. (TNPI) jointly investing in gas-fired facilities under Ang’s San Miguel Global Power Holdings Corp. (SMGP).

Through their joint venture Chromite Gas Holdings Inc., MGen and TNPI will acquire 67 percent of the power plants, with SMGP retaining a 33-percent stake in the assets.

As part of the agreement, Chromite Gas and SMGP will also buy out Linseed Field Corp., which operates the LNG terminal in Batangas.

MGen is the power generation unit of energy powerhouse Manila Electric Co. (Meralco), while SMGP is the energy arm of conglomerate San Miguel Corp. (SMC).

TNPI, meanwhile, is 100-percent owned by Aboitiz Power Corp., which holds the power business of the Aboitiz Group.

In a joint statement, MGen, AboitizPower and SMGP welcomed PCC’s decision, saying the transaction is expected to “boost the country’s energy security and infrastructure.”

“The companies expressed their appreciation for the PCC’s thorough review process and affirmed their shared commitment to advancing a competitive energy market that delivers real benefits to Filipino consumers,” the statement read.

The parties also affirmed their full commitment to adhering to all regulatory requirements, vowing to work closely with stakeholders to align their efforts with the government’s energy targets.

“This partnership highlights the shared vision of MGen, AboitizPower and SMGP to address the growing energy needs of the Philippines while promoting transparency, fairness and long-term sustainability in the energy sector,” the energy giants said.

Although the deal is considered “critical” for reinforcing the country’s energy supply, the PCC said it remains subject to conditions aimed at ensuring fair competition and transparency in the market.

Among the key competition safeguards is the PCC oversight of the competitive selection process to ensure that power supply agreements are awarded through a transparent and competitive bidding process.

The acquired companies under the deal are likewise mandated to operate independently of their parent companies, with stringent measures in place to separate IT systems, offices and management to prevent coordination or undue influence.

The antitrust watchdog said it would also relay the conditions to the Department of Energy and Energy Regulatory Commission (ERC) to address competition concerns that may arise from similar transactions.

“These safeguards strike a balance between encouraging investments in critical energy infrastructure and ensuring a fair and competitive market that benefits consumers, businesses and the broader economy,” the PCC said.

“By addressing potential competition issues while supporting energy security, the approved transaction represents a key step toward bolstering the Philippines’ energy landscape,” it added.

The conditions will remain in effect for five years, with the possibility of an extension depending on prevailing market conditions.

Sought for comment, ERC chairperson and CEO Monalisa Dimalanta said the PCC’s approval of the LNG deal marks a crucial step forward in addressing key competition concerns.

This latest development, according to analysts interviewed by The STAR, will not only strengthen the country’s energy infrastructure but also help lower electricity costs.

“The LNG facility should ensure stable and affordable power supply in the years to come, given the country’s growing demand for electricity, as a result of the nation’s sustained economic growth,” Infrawatch PH convenor Terry Ridon said.

China Bank Capital Corp. managing director Juan Paolo Colet said the PCC approval would pave the way for a massive investment in critical infrastructure, which in turn could translate to lower energy prices.

“The government clearly recognizes the importance of LNG in diversifying the country’s power supply and ensuring energy security. SMGP stands to benefit through an improved balance sheet and the availability of resources for its other investments,” Colet said.

LNG is deemed a “transition fuel” to help countries shift away from coal-fired power plants while paving the way for a wider adoption of renewable energy in the long term.

Regina Capital Development Corp. head of sales Luis Limlingan, meanwhile, expects the multibillion-dollar trifecta deal to be “income accretive” from an operation standpoint.

“This bodes well especially for Meralco and AboitizPower, which are sought after for their steady dividend payout,” Limlingan said.

Following the news regarding the deal, Meralco’s shares rose by 7.52 percent to P486 apiece yesterday. SMC’s share price likewise increased by 0.29 percent to P87.65, while that of AboitizPower slipped by 1.33 percent to P37.20.