Funding escalation to 152 B may snag VisMin power interconnection

The bloated project funding of R52 billion set forth by the National Grid Corporation of the Philippines (NGCP) may eternally snag the long-awaited Visayas-Mindanao Interconnection Project (VMIP) because this will impact adversely on Filipino electricity consumers’ pockets.

Back when the country’s transmission assets are still with state-owned National Power Corporation (NPC), the same study on planned link-up of the two grids just placed the cost of the project at $500 million to the high-end of $575 million. It essentially doubled from estimates when the transmission facilities were still under the government’s charge.

It was then lined up for funding by the Asian Development Bank (ADB) and had been approved for loan procurement way back in September 1996. Based on official documents culled from the ADB, the project was supposed to be financed by a loan from the Japanese government’s special fund.

Nevertheless, due to the Philippine government’s privatization program for its power sector culminating in the last decade, that particular ADB loan was cancelled in year 2003.

Industry watchers have indicated that the project cost – despite the rerouting of the interconnection from Leyte to Cebu and through to Dipolog in Mindanao, would not have swelled by as much as R25 billion.

It may also be noted that the project estimate was set in US dollars, so it was not supposed to swing that much on foreign exchange rates’ dynamics alone.

Energy Secretary Alfonso G. Cusi is also advancing option for the project to be undertaken by the National Transmission Corporation (TransCo), which remains the legal owner of the transmission assets – and the State will just funnel part of the Malampaya fund to the venture.

Just last week, NGCP indicated in a statement to the media that it is now close to implementing the proposed Visayas-Mindanao power link-up – and it is now just awaiting the approval of the Energy Regulatory Commission (ERC) on its feasibility study before it could move headway to blueprinted installation.

“The application for provisional authority is the result of an NGCP-commissioned hydrographic survey conducted last September to November 2016,” the private sector-led concessionaire-firm has noted.

It explained that the outcome of the survey propounds “the most viable route beginning in Cebu and terminating in Dipolog,” in Zamboanga del Norte.

“Subsequent preparations were made to include the conceptual design, detailed cost estimate and update of the system simulation study using the Cebu-Dipolog route in the ERC application,” NGCP said.

The company stressed that it similarly conducted “inland and route surveys for substations and overhead transmission lines.”