AC Energy Holdings Inc., the power arm of the Ayala Group, supports the public-private-partnership option for the 121-kilometer (km) Batangas-Manila natural gas pipeline.
”Perhaps if the government takes the lead and puts in the infrastructure, yes, it could be a PPP for the liquefied natural gas (LNG) terminal and pipeline. The pipeline could be an enabler for the gas industry,” AC Energy chief executive officer John Eric Francia told reporters Friday.
He noted the project should be offered under a build, operate and transfer arrangement, financed by capital from the private sector but accompanied by a stream of government funds from the national treasury to the winning bidder.
The AC Energy chief executive explained the project would boost the natural gas industry, which is critical for the future of the energy sector as the Malampaya block is projected to run out of reserves by 2024.
Francia said the current challenge for natural gas, for the private sector, comes from re-gasification and transportation costs.
He stressed the strategic placement of the pipeline could increase revenues as the proposed route would pass through industrial parks.
The AC Energy chief executive added the transport sector could also benefit from it.
Francia also said the pipeline would likely have no effect on the power rates since fuel costs are passed on charges. However, it will still benefit the power sector, causing natural gas to be price competitive with coal.
The AC Energy chief executive warned that the lack of natural gas infrastructure could lead to higher electricity prices.
”The peak and intermediate demand will be served by peak and diesel. If the mix is coal, renewable and diesel without gas—it will be expensive. People have to see that without gas, this is what will happen to power prices,” he said.