Petron, partner form P3.4-billion power generation company

MANILA, Philippines - Petron Corp. together with Two San Isidro SIAI Assets Inc., formed a P3.4- billion new company that will engage in the power generation business, according to documents filed with the Securities and Exchange Commission (SEC).

The new company called Limay Energen Corp. has obtained a corporate license from the SEC. Listed as its primary purpose is to build, maintain, sell and lease power generation plants, facilities, and other related assets.

Out of its authorized capitalization of P3.4 billion, P850 million has been subscribed and P212.5 million paid up.

Two San Isidro is a shareholder of Liberty Telecom Holdings Inc., a joint venture between food to power conglomerate San Miguel Corp. and Qatar Telecom.  It subscribed to P509.99 million worth of shares of Limay Energen.

Petron, on the other hand, subscribed to P339.99 million worth of shares of the new company.

Petron earlier said it was keen on building a 70-megawatt power plant within its refinery in Limay, Bataan, slated for completion by the third quarter of 2012 instead of the original target of first quarter the same year.

Estimated to cost around P5 billion, the Limay power plant will supply 35 to 40 megawatts of the power requirement of Petron’s refining facility, and the excess capacity will be sold to the grid.

Once the plant becomes fully operational, Petron is expected to to save P1 billion per year on energy costs.

Petron, which is now controlled by San Miguel, recently raised P10 billion from the issuance of 100-million perpetual preferred shares to partly finance the construction of the Limay plant.

Putting up its own power supply is part of Petron’s cost efficiency and reliability program.

At present, Petron’s refining facility in Limay, the country’s largest, has a capacity of 180,000 barrels per day.

Petron has an overall market share of 36.4 percent higher than its nearest competitors Pilipinas Shell Petroleum Co.’s 27.9 percent and Chevron Philippines Inc.’s 13.9 percent. The three oil giants account for over 78 percent of the domestic oil market.

San Miguel, through power generation arm San Miguel Energy Corp. (SMEC), has the largest capacity portfolio to include the 620-MW Limay Combined Cycle Power Plant, and the contracted energy output of the 1,000-MW Sual coal-fired power plant, 345-MW San Roque multi-purpose hydro plant and the 1,294 MW Ilijan natural gas power plant.

For the Luzon grid, SMEC now holds 28.1 percent while for the national grid, its share is estimated to be around 21.4 percent.

San Miguel has been aggressively expanding into the power business from its core food and beverage interests as it seeks new revenue sources to drive further growth.