Special report: In the dark on the Mindanao power crisis

Published by rudy Date posted on May 21, 2013

(Last of two parts)

MANILA, Philippines – There’s a wide-array of reasons for the Mindanao crisis. As expected, President Benigno Aquino blames his predecessor for the problem.

Many experts blame the deterioration of the Agus and Pulangui hydroelectric power plants as the cause of the problem and the overreliance on these plants.

The 700-megawatt Agus-Pulangi plant sources its power from Lake Lanao, but the water level there is nearing critical level.

In fact, in 2011 when El Niño hit, blackouts in some areas lasted 12 hours.

Some blame the Electric Power Industry Reform Act (EPIRA) of 2001 – which mandated the privatization of the power industry – as the reason for the crisis. Bayan Muna Rep. Teddy Casiño has called for the scrapping of the law and reversal of the privatization policy to solve the crisis.

“EPIRA’s privatization policy is not only a mistake, it is a fatal mistake. It is a major factor for the power crisis in Mindanao. The reason for neglecting the rehabilitation of the Agus and Pulangui hydroelectric plants is because government planned to sell it,” Casiño said last month.

He said EPIRA systematized and expanded the privatization and deregulation of the power sector. It completely transferred the control and administration of generation plants to private companies.

It also privatized the transmission of power. Thus, private corporations, which have long controlled the distribution utilities, have become even more powerful since they now own the generation plants as well,” he added.

Furthermore, Casiño said, more than half of the total generation capacity, the entire transmission system and a large part of distribution, are now controlled by a few large companies.

“After privatization, only three groups control 52 percent of generation capacity – San Miguel Corp., Aboitiz, and Lopez,” he said.

Long-term solution

Many, however, say that it is too late for finger pointing. “This is not the time for finger pointing. What we need is a detailed, doable catch-up plan to address the power shortage in Mindanao,” said former Budget and Management Secretary Benjamin Diokno.

Diokno said what is needed are long-term solutions.

“First, build the submarine link between the Visayas and Mindanao. By the way, this project was already in the drawing board as early as during former President Corazon Aquino’s term,” Diokno told The STAR.

The National Grid Corp. of the Philippines (NGCP), the country’s transmission highway operator, has said that it is set to proceed with the P24-billion Leyte-Mindanao Interconnection Project (LMIP).

The LMIP involves linking the Visayas and Mindanao grids through 23 kilometers of submarine cables from NGCP’s Leyte and Surigao substations. The project is deemed to help the national power grid as it would optimize the operations of hydropower plants in Mindanao.

The energy sector would expand the entire transmission network by connecting the Visayas and Mindanao grids by 2017 and also the transmission network between Batangas and Mindoro by 2014.

Indeed, economist Gerardo Sicat said the national government needs to push for the Leyte-Mindanao connection.

“What needs to be done is to speed up base load construction and to get the local governments and the national government to push connection to the Leyte grid. Everything is chancy there as long as we depend fully on hydropower, which is less reliable given that our watersheds in Mindanao need great uplift,” Sicat told The STAR.

Aside from pursuing the Leyte-Mindanao interconnection, the government must also speed up the construction of baseload plants in Mindanao.

Diokno warned the construction of base load plants could take time so the government has to start now.

“This could take three to four years to complete but the process has to start now. Third, put some order as private sector firms compete to provide the quick but expensive generator sets in key areas in Mindanao. This will prove to be costly for firms, farms and households in Mindanao but they have no choice. Higher costs of power could make some firms uncompetitive; for households many will have to reduce consumption of non-power goods, hence it will slow consumption. The overall impact of higher power costs will be slower economic activity, though much better than an economy with no power at all,” Diokno also said.

He cites the preference of Mindanaoans for cheaper power cost as one of the reasons behind the problem.

“The Mindanaoans have a preference for cheaper hydro power for as long as it last. That’s why they were opposed to the construction of a submarine cable that would link Mindanao to the Visayas and be part of one grid. Power costs is expensive in Luzon while power costs in Mindanao is lower thus it was not attractive while the hydropower in Mindanao lasts. Thus in the meantime, no new power capacity were built in Mindanao,” Diokno said.

The inefficiency of Napocor, aggravated by corruption, was also one of the culprits, he said.

“Napocor was an inefficient and ineffective government corporation then. Before its mandate and responsibilities were downsized, Napocor was the biggest ‘bleeder’ in the government budget,” he said.

End-October 2011 data showed that Napocor’s debt stood at $16.63 billion, even higher than the $16.39 billion outstanding in 2001 when Congress passed the Electric Power Industry Reform Act or Epira.

According to the Power Sector Assets and Liabilities Management Corp. (PSALM), the entity tasked to manage Napocor’s assets and liabilities, as of the end of 2011, PSALM has successfully privatized 79.56 percent of the country’s generating plants, the equivalent of 4,102.33 megawatts (MW) in capacity, 3,370 MW of which is generated by the facilities in the Luzon and Visayas grids.

“The proceeds from the privatization of these power assets, including the concession of the country’s sole transmission business and the transfer of the contracted capacities of IPPs to the private sector, have reached $10.21 billion,” PSALM said.

Indeed, it is possible to solve the power crisis in Mindanao, as experts have said. What may be lacking is will power. In the meantime, Mindanaoans continue to suffer from power outages. –Iris C. Gonzales (The Philippine Star)

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