AIIB funding for VisMin grid link-up sought

The government through the Department of Energy and National Transmission Corporation (TransCo), had started exploring financing options with the Asian Infrastructure Investment Bank (AIIB) for the Visayas-Mindanao transmission line interconnection.

Energy Secretary Alfonso G. Cusi noted “there are already initial talks” on probable access to AIIB funding, although he qualified that they are not limiting their option to that.

Another multilateral lending agency the government has had preliminary talks with is the World Bank, according to the energy secretary.

The government has also been revisiting previous feasibility studies on the proposed grid’s link-up as the one undertaken by Japanese firm Chubu Electric for TransCo in 2006 just pegged project cost at $275 million (that was for LeyteMindanao route) – yet even lower than the study outcome of the Asian Development Bank in 1996 at $575 million.

A recently concluded study by the National Grid Corporation of the Philippines (NGCP) had relatively set a higher project cost of R52 billion, with the linkup completion targeted in year 2020.

TransCo President Melvin A. Matibag indicated that the Visayas-Mindanao Interconnection Project (VMIP) could be pursued either through a government-to-government (GTG) deal or via public-private partnership (PPP) arrangement.

He explained that while initial funding could either be tapped from the AIIB or other multilateral lending entities, the payment to the loan shall be covered by remitted royalty share of the State into the Malampaya fund.

“That way, upfront capital spending for the

project will not be passed on as added cost in the consumers’ electric bills,” he said.

Upon completion, Matibag emphasized that the VMIP would still be placed under NGCP, but the charges for the use of the interconnected transmission facilities will just cover costs on operation and maintenance – and must not include the project’s capital cost.

He qualified though that he has yet to make a more detailed presentation on this to the Cabinet – a follow-up to the initial proposal he lodged in Malacañang early this month.