MVP downplays need for LNG import terminal - Malampaya gas can last 10 more years

Published February 27, 2019, 10:00 PM By Myrna M. Velasco

https://business.mb.com.ph/2019/02/27/mvp-downplays-need-for-lng-import-terminal/

Latching on assumptions that Malampaya can still yield gas after the lapse of the contract of the original developers in 2024, Manila Electric Company (Meralco) Chairman Manuel V. Pangilinan indicated that the country’s energy sector may not really need to set up liquified natural gas (LNG) import terminal that soon.

He said the government must be transparent as to the extent of reserves that can still be extracted from the Malampaya reservoir post-2024, as even the Malampaya consortium already set forth prospects that the field will still have production in the next 10 years.

“Why do we need to import if we have our own gas reserves, we shouldn’t waste the country’s resources,” Pangilinan stressed.

At this stage, he opined that the most prudent step for the government is to firmly study the remaining potential of the country’s commercial gas field – and make that scale of reserves known to the public instead of taking a panicky approach on the installation of LNG import facility.

“Gas terminals mean we’re going to import gas…the question is: will it run out on that year? The contract will definitely expire in 2024 – that’s definite, but the gas resources, that’s entirely a different issue,” Pangilinan stated.

He primarily cited the recent pronouncement of Shell Philippines President Cesar G. Romero that the Malampaya field could still produce enough gas for the country’s existing power plants through years 2026-2030.

“So the real question now is: when will the gas really run out? Because when the contract expires in 2024, it does not necessarily mean that gas production will also come to an end,” Pangilinan noted.

He further asserted “everybody is assuming 2024, and my God it’s Armageddon, I don’t think that is true.”

Pangilinan thus prodded media to be more inquisitive as to when the Malampaya field will actually reach production wane, “because why do we need LNG terminal if there would still be gas there until 2030?”

The Pangilinan-led group had been among the investors that studied the potential of setting up LNG import terminal in the country as a replacement to the Malampaya gas, but with the recent declaration of relevant industry players, it is now taking a lukewarm stance on the LNG option.

The Meralco chairman averred “somebody has to step up and say: wait a minute, when will gas production really decline, so that should be asked and it must be published and the government must come up with a definitive statement.”

Meralco core income jumps 18% in 4th quarter

February 27, 2019 | 12:08 am By Victor V. Saulon, Sub-Editor

https://www.bworldonline.com/meralco-core-income-jumps-18-in-4th-quarter/

MANILA Electric Co. (Meralco) posted a core net income of P5.72 billion in the fourth quarter of 2018, higher by 18.2% compared with the P4.84 billion a year earlier largely because of the higher power consumption during the last three months of 2018.

Reported net income, which includes one-time gains, hit P4.81 billion during the quarter, up 7.8% from the P4.46 billion posted in the same quarter in 2017.

Oscar S. Reyes, Meralco president and chief executive officer, described the distribution utility’s performance in 2018 as “another strong year” for the company “partly as a result of relatively conducive economic environment.”

“In terms of GDP (gross domestic product), we’ve seen the last nine years with GDP of over 6% year-on-year, something that the Philippines has managed to move to a new trajectory of growth,” he said during the company’s media briefing at its head office in Pasig City.

For the full-year 2018, core net income rose 10.9% to P22.41 billion from P20.21 billion previously, driven by the 5% increase in volume of energy distributed, higher financing income from the funds deployed due to the improved yields, recognition of service fees, among others.

Reported income was up 13% to P23.02 billion from P20.38 billion.

In terms of energy sales, growth improved by 5.3% to 44,313 gigawatt-hours (GWh), including the volume distributed by subsidiary Clark Electric Distribution Corp., Mr. Reyes said.

Meralco officials said the increase in electricity sales volume was driven by the combined contributions across all customer sectors and the effects of a relatively resilient domestic consumption driven by the rapidly expanding Philippine offshore gaming operators, the steady contribution of the business process outsourcing industry, and the growth in remittance from overseas Filipino workers and migrants.

“Customer base also expanded 4.6% to 6.61 million customers,” Mr. Reyes said.

Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, said gross revenues last year grew to P304.5 billion, 8% more than the P282.6 billion recorded the earlier year.

She said the increase was a result of higher sales volumes and pass-through charges. These in turn resulted from higher average fuel prices, a weaker peso, higher prices at the wholesale electricity spot market.

“That’s specifically for generation charge,” she said.

Electricity revenues, which accounted for 97% of gross revenues, totaled P295.4 billion, up from P275.2 billion, she said. Generation and other pass-through components as a percentage of total electricity revenues was at 79% in 2018, a percentage point higher than in 2017.

“On a quarterly basis, the fourth quarter revenues were higher than the third quarter when major weather disturbances resulted in unserved energy. Adding to the increase is the continued wrap up of office and retail spaces,” she said.

“Also, sales in the last quarter of the year is normally boosted by higher consumption, the increase in production activities to keep up with demand, and longer operating hours of malls and other establishments during the Christmas season,” she added.

OUTLOOK
Meralco Chairman Manuel V. Pangilinan expressed optimism about the distribution utility’s performance this year.

“Financial indicators are good, volume is good, customer account is better,” he said. “We just have to make sure that the tariff for the fifth regulatory period should be okay.”

The Energy Regulatory Commission regulates the power distribution utility within a so-called “reset period” consisting of four regulatory years. The company’s regulatory year begins on July 1 and ends on June 30 of the following year. Its fourth reset period began on July 1, 2015 and ends on June 30, 2019.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.

Construction delays hit GenSan solar power plant

February 27, 2019 | 12:02 am

https://www.bworldonline.com/construction-delays-hit-gensan-solar-power-plant/

HARBOR STAR Shipping Services, Inc. on Tuesday said the commissioning of a subsidiary’s solar power plant project in General Santos City has been pushed back to next month, due to construction delays.

In a disclosure to the stock exchange on Tuesday, Harbor Star said the commissioning of Astronergy Development Gensan, Inc.’s (ADGI) project was originally scheduled for Jan. 31, and has now been moved to before March 31.

“The causes of delay were: (a) construction delays of support structures by the Engineering Procurement and Construction (EPC) Contractor and its subcontractors; and (b) delay in the delivery of equipment and accessories needed for the substation to connect to the grid,” the company said.

Harbor Star said delays in the construction due to the fault of the EPC contractor will be subject to penalties, under the contract.

“All the equipment and accessories are now in or en route to the project site,” the company said.

In 2017, Harbor Star’s wholly owned subsidiary Harbor Star Energy Corp. (HSEC) acquired a 60% stake in ADGI, which expanded to 100% stake last year. ADGI is licensed to operate a 25 megawatt (MW) solar power plant in General Santos City, which is expandable to 75 MW.

In the same disclosure, the tugboat and cargo vessel firm said its three-year exclusivity contract with Palau-based firm Palau Sea and Air Transport Agency (PSATA) is on hold per advice of the company.

“(PSATA) informed (Harbor Star’s) Management that there would be a delay in the implementation of the projects in Micronesia for various reasons. Thus, (Harbor Star) committed its tug and barge tandems for the Cebu-Cordoba Link Expressway (CCLEx),” it said.

“(PSATA) continues to request (Harbor Star) for barges but (Harbor Star’s) Management decided to allocate its resources to the more profitable CCLEx and Cavite Gateway projects,” it added.

Last year, Harbor Star signed a P118-million contract with Cebu Link Joint Venture (CLJV) to provide two specialized barges for the construction of Metro Pacific Tollways Corp. (MPTC)’s CCLEx project.

It is also a barge operator at the Cavite Gateway Terminal, a project of International Container Terminal Services, Inc. (ICTSI) operated by subsidiary Cavite Gateway Terminal, Inc.

Harbor Star reported flat attributable net income at P66.26 million during January to September 2018, from P65.73 million the previous year. — Denise A. Valdez