Meralco baseload tender favors San Miguel Corp, Aboitiz Power

From AB Capital's The Opening Bell: Three Moves

Event

Meralco identified the three lowest bids for its 600MW baseload CSP, with SMC's Mariveles Power Gen Corp. (MGPI) and Sual Power Plant (SPI) offering 400MW at P5.36-5.44/kWh, followed by Aboitiz Power (AP)'s GMEC at P5.58/kWh for 200MW. Masinloc and AP's Therma Luzon bid above these levels and were not selected. The 15-year power supply agreements (PSAs) remain subject to post-qualification, board approval and Energy Regulatory Commission (ERC) clearance, with supply beginning in 2028 and 2029.

View

Results reinforce that large, depreciated coal fleets remain the most competitive source of firm baseload power in Luzon, with only SMC and AP able to clear at these levels among six qualified bidders. The contracts improve utilization and revenue visibility for the winning gencos, while remaining earnings-neutral for Meralco (MER) as generation costs are passed through.

Catalyst

Final post-qualification and ERC approval of the PSAs, which would formally secure the contracted volumes ahead of the 2028-29 supply start.

Action

Positive for SMC and AP, with the larger benefit accruing to SMC given 400MW across two plants versus AP's 200MW via GMEC. Group earnings impact should remain limited given the size relative to their portfolios. We view this primarily as a sentiment catalyst until ERC clears the PSAs.

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