Mindanao power lack to prune growth

A former director general of the National Economic and Development Authority (Neda) said on Sunday that the power problem in southern Philippines is expected to drag down the economy, which is projected to grow by 6 percent to 7 percent this year.

“What is happening in Mindanao is bringing down economic growth, said Ralph Recto, who served as Neda chief during the previous administration and is now chairman of the Senate ways and means committee.

But with enough energy supply in the South, Recto pointed out, the country may even reach “7.5-percent” growth in the gross domestic product (GDP), far exceeding the 6-percent GDP growth forecast recently by the Philippine-based lender Asian Development Bank (ADB).

The senator said the “opportunity” for the 7.5-percent GDP growth apparently had been “lost.”

Recto reiterated his proposal to construct a submarine transmission line from the Visayas (the Philippines’s third-biggest group of islands) to Mindanao (the country’s second-biggest island grouping), to connect the South to the national power grid so that it can get the excess power produced in Luzon (the Philippines’s largest group of islands) and the Visayas.

“Connect the grid now…. We have excess capacity in Luzon, we bring it to the Visayas when they need it. We can also bring it to Mindanao,” he said.

Recto noted that the proposal has been around since he was in the Neda, but with what is happening in Mindanao, he said, there is more reason for the National Grid Corp. of the Philippines (NGCP) to finally consider it.

“Because of what is happening now, they would [have to] take a second look. I think there’s more reason now to connect the grid so that the power sector can be more efficient…. I believe that it’s just a matter of time for the connection of the grid. Hopefully earlier, not later,” he said.

Mindanao is bleeding from its rotating blackouts, which have cost one growth area alone—Soccsksargen—an average of P100 million a month. Soccsksargen groups South Cotabato, Cotabato, Sultan Kudarat and Sarangani, and General Santos City.

Rey Billena, a business chamber leader in this south-central Mindanao growth area, said last week the bigger losses were incurred by seven canning factories and deep-sea fishing operators in General Santos, the country’s reputed tuna capital, and adjacent South Cotabato.

These losses were recorded in March and April, when the blackouts lasted four to seven hours daily. In January and February, the power outages were felt two to four hours daily.

More diesel to run generator sets of the canneries and other food-processing factories, shopping malls and plantations cost these businesses P2 million a day.

Billena said one cannery alone lost P200,000 to P300,000 in wages for workers who were forced to call a day off due to the blackouts.

The losses amounted to a total of P8 million to P10 million per cannery per month,” he added. “And there are seven canning factories here.”

Stable energy supply to Soccsksargen is expected by October 2015, when a 200-megawatt coal plant of Conal Holdings Inc. in Maasim, Sarangani, begins operating.

Another 300 megawatts are expected from an Aboitiz project in Davao City that would operate also by that year but MinDA said even with the additional 500 MW from it and the Conal plant, “we would [still] be operating without a comfortable reserve power.”

Mindanao would need at least 100 MW of power annually to stabilize the current shortfall of as much as 200 MW and to meet the projected annual growth rate of 4.9 percent.

During the last 11 years, it was able to put up generation projects that churned out only 200 MW. –Mia M. Gonzalez / Reporter, Businessmirror