SMC, Petron shelve energy joint venture

MANILA, Philippines - Oil giant Petron Corp. said it would no longer pursue the creation of a joint venture company with San Miguel Corp.’s energy arm.

“The formation of the joint venture company between Petron and San Miguel Energy Corp. (SMEC) will no longer be pursued,” Petron said in a disclosure to the Philippine Stock Exchange yesterday.

Petron did not disclose other details on the aborted plan. 

The joint venture firm would have been responsible for putting up and operating a solid-fired power plant in Limay, Bataan. 

SMEC earlier bagged the right to operate the 620-megawatt (mw) combined cycle plant in a bidding last year with its offer of $13.5 million, an amount which was above the government’s reserve price for the facility.   

Commissioned in 1993, the Limay power plant, which is approximately 145 kilometers west of Manila, is designed to meet the base-load demand of the Luzon grid.

The successful negotiated sale was government’s fourth attempt to privatize the Limay plant.

Limay is the only power generation business that would be consolidated into San Miguel’s books this year.

Petron itself is building a power plant in Bataan that will feed the power supply needs of its nearby refining capacity.

SMEC is the administrator for the 1,000-MW coal-fired Sual coal-fired power plant. It also recently took over the 1,200-MW Ilijan gas plant and also acquired earlier this year 100 percent of the outstanding capital stock of Daguma Agro Minerals Inc., a coal mining firm situated on a 2,000-hectare property located in South Cotabato.

The power facility remained unsold after public bidding in July 2008 and January 2009 and negotiations held in March 2009, primarily due to lack of interest from investors.