By Sheldeen Joy Talavera, <\/b>Reporter<\/i><\/p>\n
THE PHILIPPINE Competition Commission (PCC) announced on Monday that it has sanctioned the $3.3-billion significant agreement among three energy titans, permitting them to advance with their collective acquisition of power plants and a liquefied natural gas (LNG) facility in Batangas, albeit subject to specific stipulations.<\/p>\n
In a declaration on Monday, the PCC conveyed its endorsement of the joint acquisition of two gas-fired power stations and an LNG terminal by Meralco PowerGen Corp. (MGen), Therma Natgas Power, Inc. (Therma), and San Miguel Global Power Holdings Corp. (SMGP).<\/span><\/p>\n \u201cThe transaction, deemed pivotal for bolstering the nation\u2019s energy supply, is conditioned to ensure equitable competition and enhance transparency,\u201d the competition regulatory body remarked.<\/p>\n MGen operates as the power generation division of Manila Electric Co. (Meralco), while Therma is a fully owned subsidiary of Aboitiz Power Corp. (AboitizPower) through Therma Power, Inc. (TPI). SMGP serves as the energy sector arm of conglomerate San Miguel Corp.<\/span><\/p>\n Within the framework of the $3.3-billion agreement, MGen and AboitizPower will collaboratively invest in two of SMGP\u2019s gas-fired power facilities: the 1,278-megawatt (MW) Ilijan power station and the newly established 1,320-MW combined cycle power plant.<\/p>\n The trio will also allocate funds towards the LNG import and re-gasification terminal owned by Linseed Field Corp. in Batangas.<\/p>\n In a combined statement, MGen, AboitizPower, and SMGP expressed their approval of the PCC\u2019s sanction, indicating that the undertaking is anticipated to \u201cenhance the nation\u2019s energy security and infrastructure.\u201d<\/p>\n \u201cThe firms conveyed their gratitude for the PCC\u2019s detailed examination process and reiterated their joint commitment to fostering a competitive energy marketplace that delivers tangible advantages to Filipino consumers,\u201d the energy leaders stated.<\/p>\n Following the approval, the organizations assured their adherence to all regulatory mandates and committed to \u201cworking closely with stakeholders to harmonize their initiatives with the government\u2019s energy objectives.\u201d<\/p>\n \u201cThis collaboration underscores the mutual vision of MGen, AboitizPower, and SMGP in addressing the growing energy demands of the Philippines while endorsing transparency, fairness, and long-term viability in the energy industry,\u201d they remarked.<\/p>\n Nonetheless, the PCC has highlighted \u201cpotential competition issues\u201d identified during its scrutiny of the mega-agreement, \u201cincluding risks of coordination within the national power generation sector and foreclosure in power supply arrangements with distribution utility firms.\u201d<\/span><\/p>\n The PCC remarked that the \u201cultimate\u201d parent companies \u2014 Pilipinas Enterprise Management Holdings, Inc.; Aboitiz & Company, Inc.; and Top Frontier Investment Holdings, Inc. \u2014 had presented \u201cvoluntary commitments\u201d on Oct. 18 to rectify these competitive issues.<\/span><\/p>\n The PCC reviewed these commitments, incorporating feedback from stakeholders, industry participants, the Department of Energy (DoE), and the Energy Regulatory Commission (ERC).<\/span><\/p>\n The PCC announced its approval of the resulting voluntary commitments from the firms on Dec. 20, asserting that these stipulations are \u201ccrucial for sustaining a competitive market.\u201d<\/p>\n \u201cVital safeguards include PCC supervision of the Competitive Selection Process (CSP) to guarantee that power supply agreements are granted through a clear and competitive bidding framework. This oversight aims to avert collusion or unfair practices,\u201d it stated.<\/span><\/p>\n \u201cThe acquired firms must also function autonomously from their parent organizations, with stringent measures to differentiate IT systems, offices, and management to prevent coordination or unwarranted influence.\u201d<\/p>\n The boards of directors of these companies should feature independent members, and internal trading divisions are to operate separately from affiliates, as per the PCC\u2019s directives.<\/p>\n The PCC additionally instructed power plants to report unplanned outages within seven days to the DoE to enhance transparency. Reports pertaining to the competitive retail electricity market must also be \u201cshared\u201d with the PCC.<\/p>\n The parent companies are required to designate a competition compliance officer to oversee the adherence to these commitments, according to the regulatory agency.<\/span><\/p>\n \u201cThe PCC will inform the DoE and ERC regarding the imposed conditions, as well as facilitate alignment of existing guidelines and policies with competition law and policy to mitigate possible competition issues arising from analogous transactions,\u201d it declared.<\/span><\/p>\n The PCC indicated that the conditions will be effective for five years, with the option for extension based on market circumstances. Breaches might incur daily penalties of up to P2 million per violation, among other consequences.<\/p>\n When asked for remarks, ERC Chairperson and Chief Executive Officer Monalisa C. Dimalanta stated that the commission has yet to receive a copy of the approval for the transaction.<\/p>\n \u201cIt is essential for us to evaluate the terms of such approval in order to validate and verify ongoing compliance by the involved parties with the pertinent aspects of the EPIRA (Electric Power Industry Reform Act),\u201d she commented in a Viber message.<\/span><\/p>\n \u201cWe hope that the PCC\u2019s endorsement signals a path forward that addresses these matters,\u201d she added.<\/p>\n Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, remarked that the establishment of the LNG facility should guarantee a stable and affordable power supply amid the country\u2019s increasing demand.<\/p>\n \u201cIt should, however, represent just one of many power sources for our requirements, as LNG remains subject to fluctuations in global pricing, and it would be best if the country maintains an energy mix comprising various sources, with a clear inclination towards renewables,\u201d he commented via Viber.<\/p>\n