First Gen reviewing fourth LNG shipment

By Alena Mae S. Flores – February 29, 2024, 8:35 pm
from manilastandard.net

First Gen Corp. said Thursday it may not pursue the delivery of its fourth imported liquefied natural gas (LNG) cargo without a firm commitment from Manila Electric Co. (Meralco) to pay the costs without clearance from the Energy Regulatory Commission (ERC).

First Gen said in a disclosure to the Philippine Stock Exchange it initiated an emergency tender process for a fourth LNG cargo with a target delivery in March in the interest of energy security.

It said the LNG order would ensure that the gas plants have the option to have a full LNG inventory prior to the advent of the summer months.

First Gen said given Meralco’s advice that it is constrained to not pay for certain LNG-related costs during commercial operations of the gas plants in the absence of an ERC clearance, its gas subsidiaries are hesitant to proceed with the purchase of the fourth LNG cargo without any commitment from Meralco.

“Without a binding commitment from Meralco, First Gas Power Corp. and FGP Corp. will not proceed with the purchase of the said new LNG cargo. Thus, in the absence of Malampaya gas, the Santa Rita and San Lorenzo power plants will be unable to utilize LNG and have no choice but to operate on liquid fuel,” First Gen said.

First Gen said liquid fuel is more expensive than LNG.

Meralco asked the ERC to act on its joint pleading with First Gen to allow the recovery of LNG costs as it will have an impact on electricity rates and power supply.

Meralco senior vice president and head of regulatory management Jose Ronald Valles said they sought the guidance from the ERC to approve First Gen’s LNG pass-on cost after it went through the validation process.

Valles expressed hope the ERC would respond soon as it takes time for First Gen to order LNG.