Government, business at odds on how to solve Mindanao power crisis

At the Mindanao Power Summit held last Friday in Davao City, quick solutions to Mindanao’s power crisis did not seem forthcoming, with stake holders objecting to the proposed privatization of government-owned power facilities like the Agus-Pulangui hydroelectric power complex and power barges.

In the past few months, power supply shortfalls have brought five-to-six hour rotating power blackouts, severely affecting the operations of industries in the island.

President Noynoy Aquino told the Summit the era of cheap power in Mindanao is over.

“This isn’t just about energy, this is about attracting investments and creating jobs, and this is about securing the future in this region.”  He said only private sector investment and participation can guarantee a steady and sustainable power supply for Mindanao.

The ownership and control by government of the power complex that has kept electricity rates in Mindanao low, at P2.93 per kilowatt hour at present, has deterred investors from investing and putting up critical power infrastructure, according to Energy Secretary Jose Rene Almendras.

Without the much needed investments, Mindanao relies heavily on hydro-electric plants, which provides about 50 per cent of the island’s electricity requirements.  This has made power supply in the region  vulnerable to drought, climate change, and other drastic changes in weather conditions, he said.

The Electric Power Industry Reform Act of 2001 (EPIRA) mandates the privatization of all state-owned power generating assets, but has so far exempted Mindanao from private takeover. The law mandates privatization in Mindanao, to include Agus- Pulangui to begin10 years after the law’s implementation or in 2011.

The Energy department has sought the deferment of Agus-Pulangui’s privatization until more generation plants are finished.

At Friday’s Summit, businessmen and distribution utilities recommended that the government retain ownership of the 700-megawatt (MW) Agus-Pulangui hydroelectric power complex as well as halt the privatization of power barges 101 to 104.

“The government should not privatize the hydroelectric plants including Agus-Pulangui and the power barges. Hydroelectric power should remain as baseload with fossil fuels acting as dispatchable power,” said Ricardo C. Juliano, vice-president for Mindanao of the Philippine Chamber of Commerce and Industry.

This view was echoed by Association of Mindanao Rural Electric Cooperatives, Inc. President Sergio C. Dagooc, who said: “When the power plants of the government are privatized, generation cost goes up because of the inclusion of the new acquisition cost. We propose the perpetual non-privatization of the existing hydroelectric plants of Agus and Pulangui in order to ensure that Mindanao generation mix or blended cost will still be competitive and affordable”.

Keeping power prices low, he claimed, will prevent a “socioeconomic problem in the future, where cost of electricity in Mindanao will go up to a level the same to that of Luzon and Visayas.” Power costs in Mindanao, according to presentations in the summit, can be around P3 per kilowatt-hour lower than rates in Luzon and the Visayas.

Mindanao congressmen have promised a bill that will prevent the privatization of Agus-Pulangui during this administration. One proposal is that a government-owned and operated corporation called Mindanao Power Co. be created to run the Agus-Pulangui plants.

Stakeholders also noted the proposed Leyte- Mindanao Interconnection Project being pushed by the government and the National Grid Corp. of the Philippines should be scrapped for fear of increasing prices.

President Aquino said he favored the review of the EPIRA  “to reevaluate if it has attained what it was supposed to attain.”  He also promised to speed up decision making on the operation of diesel power plant in Iligan City to immediately ease power shortage in Mindanao.


(Adapted from stories in the Philippine Daily Inquirer andhe sai Business World)

Photo:  Agus 6, Maria Cristina, Lanao del Norte

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