Government pitches investment opportunities in energy
THE DEPARTMENT of Energy (Doe) on Tuesday faced local and foreign investors to offer business opportunities for energy development in a country that will need 17,338 megawatts (MW) more by 2030.
“For the first half of 2016, our existing power plants’ installed capacity is 20,000 MW with avail product able capacity of only 13,877 MW, or 69% of installed capacity,” Energy Secretary Alfonso G. Cusi told participants of an energy investment forum at the Makati Shangri-La, Manila.
“The data highlight the need for critical intervention particularly to address the period where there is peak demand and low availability.”
The department, which hosted the annual forum, had identified capacities needed by each of the country’s electricity grids.
In Luzon, there is a need for an additional 10,070 MW by 2030, broken down as 4,320 MW from baseload plants, 4,800 MW from mid- merit plants and 950 MW from peaking plants, Mr. Cusi said.
The Visayas grid will need 3,618 MW of additional capacity, with 1,968 MW to be sourced from baseload plants, 1,500 from mid- merit and 150 MW from peaking plants.
“In spite of the new capacities installed in Mindanao, the grid will still need 3,650 MW additional capacity with 2,100 MW baseload requirement, 1,500 mid-merit and 50 MW peaking plants,” he said.
Mr. Cusi said power demand will continue its upward trend as the country’s industrialization and urbanization continues.
He said the basis for the department’s forecast was an expected annual gross domestic growth rate of 8% and a 1.5% population growth.
“To support these additional capacity requirements, I have directed the National Grid Corporation of the Philippines (NGCP) to expedite the implementation of the transmission development plan,” he said.
On the sidelines of the forum, he told reporters that power transmission was among the issues he wanted addressed within
his term, particularly citing the need to interconnect Mindanao to Luzon and the Visayas grids.
“Sabi ko, lagi nalang ba tayong mag-aaral [I said, are we always going to be studying] or [are we] just delaying it para matatapos na naman ang isang [for the end of another] administration? ‘ Di kami papayag doon [ We will not allow that],” he said.
“What we want is that before the term of this administration ends, matapos ‘ yan [Mindanao’s connection to the rest of the country should be completed],” he said, adding that what the department was reviewing NGCP’s franchise.
“The concession agreement — we’re having it reviewed to make sure ma- enforce natin [that there will be no legal impediment to interconnection].”
NGCP bagged in 2007 the 25year concession to operate the country’s power transmission network after an open, public and competitive bidding. It officially started operations as power transmission service provider in 2009.
Mr. Cusi emphasized that under his leadership, there would be no “cap” or “quota” on the capacity that can be installed by developers using a particular technology. At present, the country sources 34% of power from renewable energy, 33% from coal-fired power plants, 18% from oil-based stations and 14% from natural gas-fired facilities.
“What we need now is sufficient power supply, regardless of the source,” Mr. Cusi said.
In the same forum, Francisco C. Sebastian, chairman of First Metro Investment Corp., said the Metrobank group had lead- arranged and participated in three of the biggest energy project financing deals in the past three years, showing local banks’ capacity, capability and appetite to fund projects.
“Issue sizes continue to increase,” Mr. Sebastian said, adding that the bank might surpass the P42- billion financing for Manila Electric Co.’s San Buenaventura Power Ltd. Co., which is building a 500-MW coal-fired power plant in Quezon province.
“We are doing another transaction that may breach the P100billion mark,” Mr. Sebastian said.
“There is demand from local financial institutions to participate,” he noted.
“The Philippine financial system has been extremely liquid. There’s a lot of money floating around.”
During the forum, officials of the DoE and the Energy Regulatory Commission (ERC) answered questions from participants who raised the issue of power rates in the country that are among the world’s highest.
“Yes, it is correct that the Philippines has one of the highest electricity rates,” said ERC Commissioner Gloria Victoria C. Yap-Taruc.
“However, I’d like to underscore the fact that if you take a look at other countries… they have subsidies and these hidden subsidies make [rates] low.”
She said if subsidies were applied in the Philippines, taxpayers would end up shouldering the cost.
“The responsibility to contract supply of electricity to members of the franchise area now rests with the distribution utility. Each distribution utility is granted a franchise,” she said. “Based on their respective charters they have an obligation to deliver in the least cost manner.”