San Miguel to bid for Bataan power plant

San Miguel Corp., the biggest food and beverage conglomerate in Southeast Asia, is planning to add more power utilities into its fold after clinching a $1.26-billion deal to sell a large stake in its flagship brewery business. 

In a disclosure to the Philippine Stock Exchange yesterday, San Miguel said its wholly-owned unit San Miguel Energy Corp. has notified the government its intent to bid for the 620-megawatt combined-cycle power plant in Limay, Bataan.

The government., through the Power Sector Assets and Liabilities Management Corp. (PSALM), has lined up the Bataan power plant and other generating assets of the National Power Corp. (Napocor) for privatization this year.

In its bid to boost sales and ensure long-term profitability, San Miguel laid out in 2007 a diversification plan that would seek out ventures in high-growth areas such as mining, infrastructure and utilities.

Founded as a brewery in 1890, San Miguel has dominated the Philippine market for beer, dairy, processed food, grains and poultry. Faced with a maturing domestic beer market, it went on a buying spree in Asia during the past several years, spending around $2 billion, in line with efforts to boost profitability.

With a cash vault beefed up by a series of asset sales, San Miguel acquired last December the 27-percent stake of state pension fund Government Service Insurance System in Manila Electric Co. (Meralco), the largest power utility in the country.

On Dec. 24, 2008, the conglomerate signed an option agreement with UK-based fund manager Ashmore Group to acquire up to 50.1 percent stake in giant oil refiner Petron Corp.

San Miguel and its Japanese partner Kirin Holdings Co. Ltd. on Monday signed an agreement for the latter to acquire 43.25 percent of San Miguel Brewery, reducing the local conglomerate’s interest in the brewery to 51 percent but raising more cash for acquisitions.

San Miguel earlier said it is interested in bidding for PNOC-Exploration Corp. (PNOC-EC), the oil and gas subsidiary of state-owned Philippine National Oil Co.

San Miguel president Ramon S. Ang said the group remains on the lookout for opportunities in the power sector, particularly in geothermal energy development, despite previous failed attempts to acquire the assets of the National Transmission Corp. and the government’s 60 percent shareholdings in PNOC-Energy Development Corp.

PNOC-EC has interests in nine petroleum service contracts, including a 10-percent stake in the Malampaya deep water gas-to-power project off Palawan Island.   

Malampaya is the country’s largest natural gas field, powering three power plants in the country. It is operated by Shell with a 45-percent stake, in partnership with Chevron and PNOC-EC with a 45-percent and 10-percent participating interest, respectively.

Aside from PNOC-EC, the San Miguel group is also interested in acquiring three major geothermal assets to be auctioned off by the government, which include the 192.5-MW Palinpinon geothermal plant located in Negros Oriental.

San Miguel also announced last year that it would explore an alliance with Indonesia’s PT Bumi Resources, which owns the world’s largest thermal coal exporter, Kaltim Prima Coal.