Meralco set to complete studies on nat gas projects

MANILA, Philippines - Manila Electric Power Co. (Meralco), the country’s largest power distributor that is expanding into power generation, expects to complete feasibility studies for two natural gas projects next year.

The successful completion of the studies will allow Meralco to pursue liquefied natural gas (LNG) power plants for the first time.

“We are continuing with our feasibility studies on LNG in two sites: one in Atimonan, Quezon and the second is in Batangas,” Meralco president and CEO Oscar Reyes said.

He said the two feasibility studies will be completed in the first half next year.

“We should have a clearer view unless we find something that needs further validation,” Reyes said.

Meralco, through subsidiary Meralco PowerGen Corp., wants to build four 375-megawatt (MW) LNG power plants in the country. The company targets to hit a generating capacity of 2,700 MW of electricity from now until 2020.

Reyes said the feasibility studies are being conducted with partners.

Specifically, the potential LNG project in Quezon is being evaluated with Japan’s Chubu Electric Power Co. Inc. while Meralco is in talks with players in Batangas for the second plant.

In October, 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.

Reyes said the two comprehensive studies involve not only the potential market for the electricity but also the total configuration of the power plant, regasification and storage facilities, and potential natural gas suppliers.

“You have to look at the entire thing but the bias is the power plant,” Reyes said.

Meralco can also be a part of the entire project, he added.

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.

The distribution utility is building a power generation portfolio to ensure steady and cost-efficient supply of electricity in the long run.

“Over time, there will be room for both. It is a question of what comes first,” Reyes said, adding that the pacing and timing for the LNG projects will be a function of load growth and if old plants need to be retired.

Meralco is indirectly controlled by Hong Kong-based First Pacific Co. Ltd. and partly owned by food-to-power conglomerate San Miguel Corp.