Government must solve power crisis before it’s too late

CLARK FIELD (PLDT/WeRoam) — Killer typhoon “Juan” had not landed yet last Friday, but Metro Manila and other areas were already being battered blind by rotating power blackouts lasting hours.

Talk that electricity rates are going up again soon — despite the deficient and costly service — does not help ease the anxiety of residents groping as in a darkened cave.

I’m just whining as a city dweller who finds existence intolerable without electricity. What about investors who had poured in billions, only to discover belatedly that blackouts wreak havoc on their quality-control, delivery schedules and profitability?

If this is life in the capital of the Philippines, how is it in the rest of these benighted islands?

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WARNINGS IGNORED: As early as 2004, power industry leaders were warning about an impending power crisis by the years leading to 2010 if no new plants were built in three to five years.

We don’t just order a power plant the morning after a really bad blackout, open the FedEx box the next day and find a giant generator humming and delivering electricity with the push of a button.

In the best of times, it takes three to five years to build a 1,000-megawatt power plant from the ground up, at a cost of — hold your breath — $1.5 million per megawatt of capacity. Those figures are for a coal-fired plant, still the favorite of many investors.

Sounding like a broken record, experts repeatedly said in the early 2000’s that the Philippines was not attracting enough investors to bankroll additional capacity and nip the impending power crisis.

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INCONSISTENCY: Would-be investors said they were discouraged by an overly regulated power industry. They lamented that rules were being changed too often, making doing business in the Philippines quite unpredictable and expensive.

But the previous Arroyo administration failed to heed the signs. Since 2004, only 12 new power plants were built all over the country — three in Luzon, five in the Visayas and four in Mindanao.

The inconsistency is baffling. A government that swears by its economic growth plans knows that development requires commensurate power supply. Yet not enough generators were put in place as part of the bedrock of domestic growth.

As current blackouts show, the combined capacity of the country’s power plants could hardly keep up with the rising demand for power aggravated by widespread drought brought by El Nino.

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OUTAGES TRACED: Since early this year, all the grids in Luzon, the Visayas and Mindanao have been registering insufficient capacity resulting in rotating power blackouts.

Mindanao was hardest hit with power outages running up to 11 hours a day! Then President Arroyo declared a state of calamity in the South, but that did not solve the problem. Until today, blackouts are part of the daily calvary of Mindanaoans.

The crisis was not surprising. Most power plants in Mindanao are hydroelectric, which means that they need water falling by gravity to operate their turbines. With dams down to critical levels, the plants’ capacity has been low.

In the Visayas grid, the outages have been blamed on overlapping preventive maintenance on the aging power plants.

On last Friday’s blackouts in the national capital, Energy Secretary Jose Rene Almendras explained that the Sual (1,218 mw) and Pagbilao (735 mw) plants had bogged down. Both are coal-fired.

I understand that while the Sual technical problem has been fixed, repair work on the busted condenser leak in Pagbilao may take until tomorrow.

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SHOW THE PLANS: The bottom line is that we would not be having this debilitating problem if the government had been following a comprehensive plan to attract investors to build power plants in anticipation of the ever-increasing demand for electricity.

The government, particularly the Department of Energy, should give investors credible assurance that they will not be caught in the quagmire of politics and a shifting regulatory environment.

Instead of a well-thought-out comprehensive strategy, the government has taken stop-gap measures that are not only expensive but ineffective.

When blackouts hit Mindanao last March, power barges were simply deployed there. In addition, private firms were allowed to connect their generators to the grid, a generator lending program for those who wanted to lease them.

Careful and deliberate planning is needed to avert another costly power emergency similar to the crisis in the 1990s. At that time, the government had to rush the building of oil-fired plants and to contract out expensive power barges to solve the problem.

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IPP PLAGUE: The power crisis in the 1990s forced the country to accept “take-or-pay” arrangements whereby independent power producers (IPPs) were paid for their rated capacity whether they delivered it or not.

When a financial crisis struck in 1997-1998, there was suddenly a drop in the demand for electricity. The country awash with IPPs was stuck with excess capacity that it could not sell, but had to pay anyway.

But because of the take-or-pay provision in the IPP contracts, the cost of the excess or undelivered electricity was passed on to the consumers even though they had not used it. This resulted in even higher power rates.

To make matters worse, while the government was mandated 10 years ago by law to sell all 30 Napocor plants, only two of them have been privatized. This failure has delayed the rehabilitation of these plants, many of which were built in the 1970s. –Federico D. Pascual Jr. (The Philippine Star)