By Myrna M. Velasco
Korea Electric Power Corp. (KEPCO) has submitted an unsolicited proposal for the $2-billion liquefied natural gas (LNG) facilities that state-run Philippine National Oil Co. (PNOC) wants to implement.
Sources at the Korean company affirmed that they actually “forwarded an offer” to the government, but qualified that “everything is still very preliminary at this stage.”
KEPCO is an experienced player in the Philippine gas market, as it was the developer as well as operator of the 1,200-megawatt Ilijan natural gas-fired power project.
That facility’s contract will already lapse in 2022 and may already be turned over to its Independent Power Producer Administrator.
An energy official first hinted of the KEPCO submission – essentially a response to the mandate given to PNOC by Energy Secretary Alfonso G. Cusi for the state-run firm to corner unsolicited proposals up to December 31 this year on the planned LNG projects.
If a viable unsolicited bid will not turn up by yearend, PNOC’s plan is to hold a formal bidding next year for it to corner a private sector partner.
The mode it has been eyeing would either be a joint venture or build-operate-transfer (BOT) scheme.
Prospective bidders are expected to include technical, financial and legal proposals in their tenders.
The prospective investors must also submit a feasibility study or front-end engineering design (FEED) of the planned LNG investments, which will then serve as the government’s basis in choosing a partner that will match its preferred design for the LNG projects.
PNOC President Reuben S. Lista is quite forthright about their condition to integrate the company-purchased Ilijan banked gas in the partnership deal.
The government-run company’s plan is to equitize the “banked gas,” so PNOC could in turn become a strategic equity holder and partner in the gas ventures.
The currently appraised value of the banked gas had been placed at R35-R40 billion (or $700 to $800 million), but that changes depending on the swing of global gas prices at the signing of the tie-up deal.
If Cusi’s timeline would have to be followed, the groundbreaking rites for the proposed LNG investments shall be next year, and the LNG import facility shall be set on stream at the earliest in year 2020.