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TARGET PRACTICE: The real power industry in Mindanao


DAVAO CITY (MindaNews / 29 June) – First off, apologies to those waiting for this piece, if any.

Just in any parts of the country, the power industry in Mindanao is divided into generation, transmission and distribution.

Up until 2001 when the Electric Power Industry Reform Act (EPIRA) was implemented, the main problem was generation because there were only a few private assets as the main supplier of power was government, it being the operator, even up to now, of the two hydroelectric complexes that supply half of the island’s power requirements.

Even the two geothermal plants at Mt. Apo were under the Philippine National Oil Co.-Energy Development Corp., a government-owned corporation. The Mt. Apo complex was eventually privatized and went to the Lopez-led consortium in 2007.

Last year, the administration of the geothermal power plants was won by the Filinvest power arm, the Filinvest Misamis Power Corp. of the Gotianun group. This is because the Power Sector Assets and Liabilities Management Corp., the government arm that is managing its assets, has assigned the management of the power complex to a private company.

The move of the government agency will eventually increase the power cost, because the private company will eventually ask for service costs on top of the regular generation charges, including the return on its investments. Another power asset whose management the government will relinquish is the 210-megawatt Steag State Power Inc., coal-fired power complex in Misamis Oriental. Based on announcements, the auction for the power Steag generates, but not the plant itself, will be within the year.

Within the next three, the generating capacity of Mindanao will be dominated by big companies, starting with the operations of the 300-megawatt power complex of the Therma South Inc., a subsidiary of the Aboitiz Power Corp., which has expanded its project to 645 megawatts. The first unit of 150 megawatts has started to supply the Mindanao grid.

There have been moves to stop the privatization of the two government-run power complexes, the Agus in Lanao del Sur and the Pulangi in Bukidnon, but the realization of these moves will depend on Congress.

After the entry of big companies that have been developing coal-fired power plants, the Mindanao Development Authority saw the need to balance the power mix of the island, prompting to establish a web-based facilitation center for renewable energy applications so that applicants can monitor and hasten their applications. In a report this month, the center said it has attracted 290 applications which could total to about 3,000 megawatts in varied renewable energy forms.

But the biggest question is still whether the transmission grid is capable to carry all the upcoming power load. One must remember that, in the Philippine power industry, the remaining monopoly is the transmission aspect.

As stated in the previous column, the transmission system of the Philippines is mainly managed by the Chinese-led National Grid Corp. of the Philippines because 40 percent of the company belongs to the State Grid Corp. of China.

The assurance of the grid operator that it is ready for the new capacities may not be an empty promise, but still suspect because even its executives cannot fully reveal the updates on its projects. It must realize that lack of transparency begets contempt.

There were even reports, although unconfirmed, that the company has asked the power generators to prepare the transmission systems for their power plants themselves with the grid operator refunding them for whatever that they invest.

Also, officials of the grid operator admitted that the plan to interconnect Mindanao with the rest of the country has not moved an inch years after it was conceptualized.

On the distribution front, many of the distributors are electric cooperatives. What makes the situation dubious is that most, if not all, of the officials of these cooperatives are politicians who cannot independently take steps as real cooperatives should.

Among their mandates is that they be able to expand rural electrification. But which among the cooperatives have done that? It is high time for government, particularly the National Electrification Administration, to look at how these cooperatives are operating.

Of course, since the power industry is a heavily regulated sector, there has been this concept of regularity in every deal. But since even in developed economies, power play always places everything in a compromising situation. Vigilance is always a key to everything.

(MindaViews is the opinion section of MindaNews. Carmelito Q. Francisco is managing editor of the Davao City-based Mindanao Times.)

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