PANGILINAN-LED MERALCO PowerGen Corp. (MGEN) is considering taking a minority stake if it proceeds with a planned partnership with Consunji-led Semirara Mining and Power Corp. (SMPC) to operate the country’s largest coal mining site.
“If ever, we would be taking a minority position. They (SMPC) are the ones who know the business well,” MGEN President and Chief Executive Officer Emmanuel V. Rubio said on the sidelines of the Philippine Stock Exchange’s InvestPH conference on Tuesday.
He said MGEN is focused on securing a stable and reliable fuel supply.
He added that the company is conducting due diligence to assess how the coal mining site on Semirara Island in Antique could support its thermal power facilities.
“We’re still exploring… We’re trying to determine how much of the coal we can use in our coal plants. We don’t have that data yet. Those are the reasons and the criteria of us participating,” he said.
When asked about the timeline, Mr. Rubio said no firm schedule has been set and added that the parties have agreed on a flexible arrangement.
“There’s an arrangement regarding whether they can go in first and then we can come in later. We haven’t had that discussion yet because we’re still doing the due diligence. We really want to make sure that we understand what’s there,” Mr. Rubio said.
MGEN is the power generation arm of Manila Electric Co. (Meralco), which operates a diverse portfolio of power assets, including more than 1,200 megawatts of coal-fired capacity in Luzon and the Visayas.
Meralco Chairman Manuel V. Pangilinan earlier said the group is open to taking over operations, noting that it could develop a mine-mouth power project near the mining site.
He said this setup could help localize the fuel supply chain and reduce freight costs.
Semirara Island, located in Antique, covers about 55 square kilometers and can produce at least 16 million metric tons of coal annually.
SMPC has held the contract to operate the mining site for nearly 50 years and accounts for about 97% of domestic coal production.
However, the company’s operations at the site face uncertainty as the contract is scheduled for auction this year after the government denied its renewal request.
Last year, SMPC reported record coal production of 19.9 million metric tons, although this was offset by weaker prices.
Meanwhile, MGEN continued to post strong performance, contributing higher earnings to Meralco, supported by its gas and thermal assets.
Meralco’s controlling shareholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Sheldeen Joy Talavera
