By Angelica Y. Yang, Reporter
BATANGAS Clean Energy, Inc. (BCE), a joint venture which seeks to build an P82.5-billion land-based liquified natural gas (LNG) plant, has not yet been able to secure financing for the project, its top official said, citing the absence of an off-taker for the facility.
Because of this, the firm failed to meet the requirements to obtain a permit to construct expand, rehabilitate and modify (PCERM) from the Department of Energy (DoE).
“Unfortunately, BCE has not met the requirements to apply for its PCERM, primarily because we don’t have financing which is contingent on the BCE securing an off-takers agreement. On June 25, we explained this to the OIMB (Oil Industry Management Bureau),” BCE President Yari A. Miralao told BusinessWorld on Viber last week.
“[W]e remain committed to develop our LNG project but are not ready to apply for PCERM,” he said.
Mr. Miralao said an off-take agreement guarantees that banks that extend loans will get paid. Off-take agreements typically involve the advance buying or selling of a producer or importer’s goods.
His comments come after the DoE in a media release dated Aug. 20 identified six firms with permits issued by the department. BCE was not included in the list.
“It’s hard to build a facility without any customers. Banks are reluctant to lend on that kind of basis,” Mr. Miralao separately said in a phone interview on the same day.
The DoE’s OIMB said on Friday that BCE’s notice-to-proceed (NTP), a key milestone before the LNG construction phase, has expired.
“Batangas Clean Energy’s NTP has expired, and it does not have a submission for the next permit — permit to construct,” a representative of the DoE’s OIMB said through Viber.
According to an Energy department circular released in 2017, the issuance of an NTP comes before the release of the PCERM. Once the DoE releases the NTP, the proponent is given six months with a one-time extension of up to six months to submit all the requirements.
“Upon validation of the fulfillment of the NTP conditions, the DNG-REC (downstream natural gas industry-review and evaluation committee) shall recommend, for approval of the DoE Secretary, the issuance or non-issuance of the PCERM as an authority of the operator to proceed [with] the construction or expansion, rehabilitation or modifications… of the natural gas facilities,” the circular read.
Obtaining a PCERM requires submitting “proof of financial closing,” among other documents.
Mr. Miralao said the company had received an assurance from the OIMB that it can apply for a new NTP or PCERM “without prejudice.”
“With that reassurance, we intend to apply for a new NTP or PCERM when we are ready,” he said.
“Coming up with an LNG solution for the Philippines is a complicated and challenging endeavor. Delays sometimes cannot be avoided. We, however, continue to push forward and hope to report on our progress in the weeks and months to come,” he added.