Meralco unit to tap Japanese partner in LNG projects

MANILA, Philippines - The power generation unit of Manila Electric Co. (Meralco) wants to take advantage of its Japanese partner’s expertise for liquefied natural gas (LNG) power plants.

Meralco PowerGen Corp. will also benefit from the existing bulk supply deals of Japan’s Chubu Electric Power Co. Inc., an executive said.

“It is a range from 1,200 to 1,500 megawatts (MW). We have yet to agree with Chubu for the actual size,” Meralco chairman Manuel V. Pangilinan said in an interview.

Pangilinan said Meralco, which is venturing in power generation through LNG for the first time, is banking on Chubu’s expertise.

Meralco PowerGen targets building four 375-MW LNG power plants in the country in line with its plan of achieving a generating capacity of 2,700 MW from now until 2020.

Aside from technical expertise, Meralco PowerGen might also benefit from current LNG deals of Chubu.

“It is helpful because they are a huge importer of gas,” Pangilinan said, adding that the 1,200 to 1,500-MW target is achievable compared with the current capacity of Chubu.

Chubu, which has a generating capacity of around 4,000-MW through an LNG project in Nagoya, is building more power plants given the shutdown of the Fukushima Daiichi nuclear facility.

Power distributor Meralco, for its part, is pursuing electricity generation to ensure long-term supply given continuous demand growth in its franchise area.

Last month, Meralco signed a memorandum of understanding (MoU) with oil industry giant Shell Companies in the Philippines (SCiP) for the possible supply of LNG.

Under the MOU, Meralco PowerGen will conduct a feasibility study for a power plant that will be located along the proposed Batangas-Manila pipeline of the Department of Energy.

“They would supply the natural gas to the plant we will build. Shell wants to build a floating storage and regasification unit to process the LNG then sell the gas to the power plants,” Pangilinan said.

LNG is natural gas that has been converted into a liquid state for easier storage and transportation. LNG is regasified prior to distribution through pipelines as natural gas.

Aside from the LNG power plants, Meralco PowerGen will build two coal-fired power plants with a combined generating capacity of 1,200 that will cost between $2.5 billion to $2.6 billion.

Meralco president and CEO Oscar Reyes said 70-75 percent of the projects’ costs would be funded for debt and the remaining would be backed by equities.