Tuesday, May 10, 2016

DOE weighs award of banked gas contracts

by Myrna Velasco May 8, 2016

The Department of Energy (DOE) is now calculatedly weighing its steps whether or not it would still be prudent to award the “banked gas” contracts given that the tenure of the Aquino administration will already lapse in roughly 50 days.
When asked by the media if any contract award may already be considered a “midnight deal,” Energy Secretary Zenaida Y. Monsada stated that such had been “one of the legal implications we are studying.”
She noted that the management of the Philippine National Oil Company (PNOC) is still negotiating with some parties, following the failed bidding undertaken on the banked gas.
After finalizing the negotiations, the propounded contract awards would still need to go through approval processes at the PNOC Board.
Following such process, Monsada indicated that they may already run out of time for an air-tight contract award that would not be vulnerable to questioning by the next administration.
She previously told media that only one bid passed the prescribed floor price. All others, Monsada said, lodged price offers that have been below market prices.
The energy chief primarily attributed the unsuccessful outcome of the banked gas auction to the plummeting global gas prices – which in essence, served as guide for most of the bidders.
The government packaged a bidding that integrated the additional Malampaya gas volume of Shell Philippines Exploration B.V. (SPEX) so these can fuel additional 400 megawatts capacity.
The banked gas in particular is under PNOC’s charge – having bought it from the National Power Corporation (NPC) which is the gas purchaser-counterparty in the gas sale and purchase agreement for the 1,200-megawatt Ilijan gas-fired power facility.
The gas volume accrued at the time when the dispatch of the Ilijan plant was reined in – during the initial phase of its commercial operations – due to constraint in power transmission lines then.
The banked gas of PNOC out of the Ilijan plant could feed a greenfield power plant of 200-megawat capacity.

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