Environmental group Power for People Coalition (P4P) called for the review of the partnership of conglomerates in jointly operating liquefied natural gas (LNG) assets in the country warning of a possible “collusion” that could lead to higher power rates for consumers.
P4P has asked the Energy Regulatory Commission (ERC) and the Philippine Competition Commission (PCC) to look into the the partnership of Meralco Power Gen Corp. (MGen), Aboitiz Power Corp. and San Miguel Global Power Holdings Corp. (SMGP) r for the country’s first and most expansive integrated LNG facility in Batangas.
The deal, which values the entire enterprise at $3.3 billion, involves MGen and Aboitiz Power to jointly invest in two of SMGP’s gas-fired power plants, including the 1,278 megawatts (MW) Ilijan power plant and a new 1,320 MW combined cycle power facility. The three companies will then acquire the LNG import and regasification terminal of Linseed Field Corp. that will be used to receive, store and process LNG fuel for the two power plants.
“P4P is considering its options as this deal raises red flags about cross-ownership in the power industry and the possibility of collusion among power generation companies,” said Gerry Arances, P4P convenor, in a statement.
P4P said these moves violate the spirit of the Electric Power Industry Reform Act which prohibits conflict-of-interest situations in the power industry and cross-ownership of generation and distribution utilities.
The group said the law instead encourages competition to provide consumers with least-cost electricity and protect against abuses.
Earlier, the ERC said it is set to review the impact of the deal on power rates.
Monalisa Dimalanta, ERC chairperson, said while the review of the merger falls under the mandate of the PCC, the ERC is mandated to study the effect, if any, on the present and future power supply agreements between the three parties.
