PNOC President Rueben Lista said the PNOC board authorized the PNOC management to enter into comprehensive discussions or negotiations below the Ilijan price with each offer and all other potential offers.
“There is approval for PNOC to conduct another round of publication without setting a specific deadline for the submission of offers. This is to allow multiple offers to come in until such time the proposal/s with the most advantageous terms to PNOC is/are received,” stated a board resolution.
Lista said it would revert to the PNOC board for approval of the guidelines for a negotiated bid.
The board is chaired by Energy Secretary Alfonso G. Cusi.
The decision to conduct a negotiated bid was reached after two failed bid attempts conducted by the PNOC.
During the first auction, three firms—all affiliated with the Lopez group—submitted their formal interest to purchase the banked gas. Lista said one of the three firms—First Gen Corp., Prime Meridian Power and First Nat Gas—submitted an offer as low as $3.48 per Pj, lower than the floor price of the current Ilijan price pegged at $6.616 per Pj.
This prompted the PNOC to conduct a second round of bidding. However, the PNOC received no offers during the September 3 deadline.
“We will have a board meeting on September 28. We were also told by the DOE [Department of Energy] to explore the possibility of a Swiss challenge,” said Lista, adding that price negotiations “will have to start with Ilijan” price.
The PNOC official expects interests not only from the Lopez group, but also from those who are looking at putting up their respective LNG (liquefied natural gas) facilities and even gas traders.
“For now, the interest comes from two firms. But this does not mean that they are the only ones interested to buy the banked gas. There are those who are planning to put up LNG power plant. We will write to whomever we think are interested. We do not discount the likes of Shell, Vires, Limay, and gas traders such as Tokyo Gas, Osaka Gas. Meralco may want to participate because it is looking at putting up its LNG. SMC is also one. It just forgot to submit an offer last time,” said Lista.
During a hearing of the House of Representatives Committee on Energy in July, PBA Rep. Mark Aeron Sambar raised concern about the PNOC’s inability to sell its banked gas.
“We can find a balance here. We’re not telling you to sell of 97.6 petajoules at a low price nor do we want you to wait for the perfect contract. If you’re going to wait for that baka ilang beses na nagpalit ng leadership sa PNOC naghihintay pa rin tayo,” Sambar was quoted as saying.
The utilized banked gas accumulated when the 1,200-megawatt Ilijan power plant failed to fully utilize its contracted gas mainly due to dispatch constraint at the time when the plant was just in its initial years of operations.
Lista had said that part of the banked gas was sold to Power Sector Assets and Liabilities Management Corp. for P937,000 for 4.61Pj and to Shell Philippines for P2.3 billion for P6.33 Pj.
Sambar filed House Resolution 1737, urging PNOC and the DOE to disclose their plans for disposing of the banked gas.