By means of Heroes Joy Talavera Reporter
The PHILIPPINE Competition Commission (PCC) said Monday it has approved the landmark $3.3 billion deal between three energy giants, allowing them to proceed with the joint purchase of energy facilities and a liquefied natural gas (LNG) facility in Batangas, but under subject to certain conditions.
In a statement on Monday, the PCC said it has given the green light to the joint acquisition of two gas-fired power plants and an LNG terminal by Meralco PowerGen Corp. (MGen), Therma Natgas Power, Inc. (Therma) and San Miguel Global Power. Holdings Corp. (SMGP).
“The deal, considered crucial for strengthening the country’s energy supply, is subject to conditions aimed at ensuring fair competition and promoting transparency,” the competition watchdog said.
MGen is the power generation arm of Manila Electric Co. (Meralco), while Therma is a wholly owned subsidiary of Aboitiz Power Corp. (AboitizPower), via Therma Power, Inc. (TPI). SMGP is the power arm of the San Miguel Corp. conglomerate.
Under the $3.3 billion deal, MGen and AboitizPower will jointly invest in two of SMGP’s gas-fired power plants: the 1,278 megawatt (MW) Ilijan power plant and the new 1,320 MW combined cycle power plant.
The three companies will also invest in the Linseed Field Corp.-owned LNG import and regasification terminal in Batangas.
In a joint statement, MGen, AboitizPower and SMGP welcomed PCC’s approval, saying the transaction is expected to “enhance the country’s energy security and infrastructure.”
“The companies expressed their appreciation for the thorough review process of the PCC and reaffirmed their shared commitment to promoting a competitive energy market that delivers real benefits to Filipino consumers,” the energy giants said.
With the approval, the companies said they are committed to meeting all regulatory requirements and pledged to “work closely with stakeholders to align their efforts with government energy goals.”
“This partnership highlights the shared vision of MGen, AboitizPower and SMGP to meet the Philippines’ growing energy needs while promoting transparency, fairness and long-term sustainability in the energy sector,” the companies said.
However, the PCC said it identified “potential competition concerns” during its review of the mega deal, “including risks of coordination in the national power generation market and exclusion from energy supply agreements with distribution companies.”
The PCC said the “ultimate” parent companies – Pilipinas Enterprise Management Holdings, Inc.; Aboitiz & Company, Inc.; and Top Frontier Investment Holdings, Inc. – had submitted “voluntary commitments” on October 18 to address these competition concerns.
The commitments were assessed by the PCC, taking into account comments from stakeholders, industry players, the Department of Energy (DoE) and the Energy Regulatory Commission (ERC).
The PCC said it approved the companies’ resulting voluntary commitments on December 20, noting that these conditions are “critical to maintaining a competitive market.”
“Key safeguards include PCC oversight of the Competitive Selection Process (CSP) to ensure that power supply contracts are awarded through a transparent and competitive bidding process. This supervision aims to prevent collusion or unfair practices,” the report said.
“The acquired companies must also operate independently of their parent companies, with strict measures to separate IT systemsFice and management to prevent coordination or undue influence.”
The boards of directors of these companies must include independent members, while internal trading units must operate independently of their member companies, the PCC said.
The PCC also directed power stations to submit unplanned outage reports within seven days of reporting to the DoE to promote transparency. The competitive retail electricity market reports must also be “shared” with the PCC.
Parent companies are also required to appoint a competition compliance officer to monitor compliance with these obligations, the watchdog said.
“The PCC will communicate to DoE and ERC the conditions imposed, and coordinate on the alignment of existing guidelines and policies with competition law and policies to curb competitive concerns that may arise from similar transactions,” the report said.
The PCC said the terms will remain in place for five years, with the possibility of extension depending on market conditions. Violations can result in daily fines of up to 2 million euros per violation.
Asked for comment, ERC Chairman and Chief Executive Officer Monalisa C. Dimalanta said the commission has yet to receive the copy of the transaction’s approval.
“It is important for us to review the terms of such approval so that we can also verify and validate the parties’ continued compliance with the relevant provisions of the EPIRA (Electric Power Industry Reform Act),” she said in a Viber -message.
“We trust that the PCC’s approval indicates a path forward that addresses these concerns,” she added.
Terry L. Ridon, a public investment analyst and chairman of think tank InfraWatch PH, said the launch of the LNG facility should ensure a stable and affordable power supply amid growing demand in the country.
“However, it should be just one of many energy sources that meet our needs, as LNG remains subject to global price fluctuations, and it would be best if the country has a multi-source energy mix, with a clear preference for renewables ” he said in a Viber message.
Juan Paolo E. Colet, managing director of China Bank Capital Corp., said PCC’s approval “paves the way for a massive investment in our country’s energy infrastructure, which will hopefully translate into lower energy prices.”
“The government clearly recognizes the importance of LNG in diversifying the country’s energy supply and ensuring energy security,” he said via Viber.
Mr Colet said SMGP can benefit from an improved balance sheet and the availability of funds for other investments.
Meralco’s majority shareholder, Beacon Electric Asset Holdings, Inc., is partially owned by PLDT Inc.
Hastings Holdings, Inc., a part of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in Business world through the Philippine Star Group, over which it has control.