Malampaya gas supply deal seen easing power costs for consumers

Insider Spotlight

• Prime Energy signed an interim natural gas supply arrangement with South Premiere Power Corp. to fuel the 1,200-megawatt Ilijan Power Plant using indigenous Malampaya gas
• The company said the deal is expected to reduce fuel costs by about P0.36 per kilowatt-hour, with Meralco already announcing a comparable reduction in generation charges starting Sept. 1
• Prime Energy said the arrangement expands Malampaya’s role in Luzon’s power sector while supporting energy security and reducing reliance on imported fuel
  
  
  
  

Prime Energy has signed an Interim Natural Gas Supply Arrangement with South Premiere Power Corp. (SPPC) to supply indigenous Malampaya gas to the 1,200-megawatt Ilijan Power Plant in Batangas, a move the company said will help lower electricity costs by reducing dependence on more expensive imported fuel.

The agreement covers the period Sept. 1, 2026 to Feb. 25, 2027. Prime Energy said supplying Malampaya gas to one of the country’s largest power plants is expected to reduce fuel costs by an average of P0.36 per kilowatt-hour, with the savings expected to be reflected in consumer electricity bills.

The big picture

Meralco recently announced a generation charge reduction of about P0.36 per kilowatt-hour beginning Sept. 1, underscoring the immediate impact of using indigenous natural gas instead of imported fuel, according to Prime Energy.

The company said the arrangement also broadens the utilization of Malampaya gas across the Luzon power sector by supporting reliable electricity generation, providing greater fuel supply flexibility, and contributing to a more resilient and diversified energy mix.

What they’re saying

“This demonstrates that indigenous Malampaya gas can help lower electricity costs for consumers while delivering reliable energy supply,” Prime Energy president and CEO Donnabel Kuizon Cruz said in a press statement.

“Through this arrangement, the SC38 Consortium and SPPC are reducing fuel costs, maximizing the use of existing infrastructure, and strengthening the country's energy security. Every unit of indigenous gas that displaces imported fuel helps make electricity more affordable for Filipino households and businesses while reinforcing the country's energy independence.”

Donnabel Kuizon Cruz 

Prime Energy president and CEO | Contributed photo

Why it matters

Prime Energy said Malampaya remains a critical source of affordable, reliable, and cleaner energy, helping shield consumers from global fuel price volatility while supporting rising electricity demand. 

The company added that under the fiscal terms of Service Contract No. 38, about 40 percent to 60 percent of every peso of Malampaya’s net proceeds goes to the Philippine government. Over the past two decades, the project has contributed more than $14 billion in government revenues. —Vanessa Hidalgo| Ed: Corrie S. Narisma