Exciting things are happening
(Seventh of a series)
AT the start of this year, energy officials expressed concern about power shortages unless new generating plants were built. They also called for conservation measures to mitigate the impact of reduced electricity supplies whenever a power plant is shut down for maintenance or repairs.
We do not expect a power crisis in 2015 as serious as the one that the Philippines experienced during the late ’80s up to early ’90s, but the current power situation is not too far from being precarious.
According to the US Energy Information Administration, the Philippines “is facing growing concerns over resource adequacy in its power sector, as the nation is challenged to add supply quickly enough to keep up with growing demand.”
In a report published online last March, the agency noted that in Mindanao, power shortages had already led to recurring outages.
By this time, we should have learned the lessons from the past power crisis, which crippled businesses, imposed hardship on the people because of brownouts lasting as long as 10 hours, and drove down economic growth.
Data from the International Monetary Fund (IMF) show that growth in terms of Gross Domestic Product (GDP) plunged from 6.21 percent in 1989 to 3.04 percent in 1990, and contracted by 0.58 percent in 1991 before moving up to positive growth of 0.34 percent in 1992, 2.12 percent in 1993 and 4.39 percent in 1994.
We have had some improvement in the power sector since that time, and I believe it contributed to robust growth, including increased investments by the big business groups, that we are seeing now.
After the power crisis, the Philippine economy never saw another contraction, although growth fluctuated sharply during certain years, partly because of crises in the global economy.
But we need to do more. The need for stable power supply is made more significant by the growing economy. The exciting things that the big companies are doing, their aggressive expansion in their core businesses and forays in new streams of revenues and profits are increasing demand for electricity.
At the same time, the big demand for electricity has opened opportunities for investments by the big players in business. GT Capital owns 51.3 percent of Global Business Power Corp. (GBP), a leading independent power producer in the Visayas with a combined gross dependable capacity of 704 megawatts.
GBP continues to look for opportunities to expand its power portfolio not only in the Visayas but also in other parts of the country.
Trans-Asia Oil and Energy Development Corp., a unit of real estate firm Phinma Group, is reportedly eyeing to double its generating capacity to about 500 megawatts by 2016, from 250 MW in 2014.
AC Energy Holdings, Inc., of Ayala Corp., which initially ventured into renewable energy projects, is now building a 540-MW coal-fired plant in southern Mindanao as part of its efforts to have 1,000 MW in its power portfolio.
AC Energy currently has a total capacity of 133 MW in its wind-farm projects in Ilocos Norte.
Diversified San Miguel Corp. ventured into the power business by bidding for contracts to operate the power plants being privatized by the National Power Corp. This allowed San Miguel, through SMC Global Power Holdings, to build a vertically integrated power company involving fuel sourcing, power generation and power distribution.
SMC Global’s portfolio includes the 1,000-MW coal-fired Sual Power Plant in Pangasinan, the 345-MW hydro-based San Roque Power Plant, also in Pangasinan and the 1,200MW gas-fired Ilijan Power Plant in Batangas.
SMC, which operates a coal mine in Mindanao, is also building power plants in Alita, Davao and in Limay, Bataan with initial combined capacity of up to 900 MW.
Manila Electric Co. (Meralco), the country’s largest power distributor, is also ramping up its investments in power generation. The company disclosed last July its plans to invest $1.2 billion in equity in ongoing power generation projects, such as the 460-MW plant in Mauban, Quezon and the 600 MW plant in Subic, Zambales, which are being undertaken in partnership with other investors.
Meralco is also developing a 1,200-MW power plant in Atimonan, also in Quezon, which will be 100-percent company-owned. Meralco’s goal is to have a total generation capacity of 3,000 MW.
Publicly listed Vivant Corp. of Cebu’s Garcia-Escano family, which already has 249 MW in its portfolio, is planning to invest P67 billion for new power generation projects with total capacity exceeding 460 MW in the next three years.
Minergy Power Corp, which is owned 40 percent by Vivant, is currently building a coal-fired plant with three generating units of 55 MW each in Misamis Oriental. The project is expected to be completed in 2017.
Citicore Holdings Investment Inc., the parent company of listed Megawide Construction Corp., is also going into power generation with the establishment of Citicore Power. The company plans to develop up to 500 MW of renewable energy (solar, hydro and biomass) as part of its diversification activities.
Hopefully, the exciting things that the big business groups are doing in the power sector will, because of competition, help to bring down the price of electricity in the Philippines, which is currently one of the highest in Asia. (To be continued)