Lack of funding blocks Batangas Clean Energy’s P82.5-B LNG project


from Angelika Y. Yang, reporter

BATANGAS Clean Energy, Inc. (BCE), a joint venture that aims to build an onshore liquefied natural gas (LNG) facility valued at 82.5 billion pesos, has not yet secured funding for the project, its chief said Official, citing the lack of a buyer for the plant.

As a result, the company did not meet the requirements to obtain a Permit to Build Extensions, Refurbishments, and Modifications (PCERM) from the Department of Energy (DoE).

“Unfortunately, BCE did not meet the requirements for applying for its PCERM, mainly because we do not have any funding that depends on BCE concluding a customer contract. On June 25th we announced this to the OIMB (Oil Industry Management Bureau) ”, said BCE President Yari A. Miralao Business world on Viber last week.

“[W]We are still determined to develop our LNG project but are not ready to apply for PCERM, ”he said.

Mr Miralao said that an off-take agreement guarantees that banks that make loans will be paid. Purchase agreements usually include the advance purchase or sale of goods from a manufacturer or importer.

His comments come after the DoE identified six companies with approvals issued by the department in an Aug. 20 media release. BCE was not included in the list.

“It’s hard to build a plant without customers. Banks are reluctant to lend on this basis, ”Miralao said in a telephone interview on the same day.

The DoE’s OIMB announced on Friday that BCE’s Notice-to-Proceed (NTP), an important milestone before the LNG construction phase, has expired.

“The Batangas Clean Energy NTP has expired and there is no submission for the next permit – the building permit,” a representative of the DoE’s OIMB said of Viber.

According to a circular from the Ministry of Energy published in 2017, an NTP is issued before the PCERM is published. Once the DoE publishes the NTP, the applicant is given six months with a one-time extension of up to six months to submit all requests.

“After validating compliance with the NTP conditions, the Downstream Natural Gas Industry-Review and Evaluation Committee (DNG-REC) recommends issuing or not issuing the PCERM as the operator’s authority for approval by the DoE secretary in order to proceed [with] the construction or expansion, refurbishment or modification … of the natural gas systems, ”says the circular.

In order to receive a PCERM, a “proof of financial close” must be presented.

Mr Miralao said the company had received an assurance from the OIMB that it could apply for a new NTP or PCERM “without prejudice”.

“With this commitment, we intend to apply for a new NTP or PCERM when we are ready,” he said.

“Developing an LNG solution for the Philippines is a complicated and challenging undertaking. Sometimes delays cannot be avoided. However, we are moving forward and hope to be able to report on our progress in the coming weeks and months, ”he added.

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