Delegates and stakeholders at the Mindanao Power Summit went home with more disappointment than relief following President Benigno ‘Noynoy’ Aquino’s announced commitment to proceed with the privatization of the Agus and Pulangi hydroelectric plants, which comprises 53 percent of the island’s installed capacities.
Although Aquino said the sale of these power plants could be delayed, he said Mindanao residents should brace for the inevitable and live with more expensive power supply.
Local government officials as well as Mindanao’s 22 electric cooperatives are opposing the sale of these remaining generating assets of the National Power Corporation (Napocor) and some have called for the re-acquisition of fossil-fired power plants which were already sold in the aftermath of the passage of the Energy and Power Industry Reform Act of 2001 or otherwise known as Republic Act 9136.
For close to five decades, Mindanao has enjoyed cheap and reliable energy from these hydroelectric plants as well as the Mt. Apo Geothermal plant. Failed government policies and neglect however led to the thinning of supply which is now a real threat to Mindanao’s economy.
Unfortunately, even government functionaries cannot seem to agree on the extent of Mindanao’s power and energy problems.
Last month, President Aquino said distribution utilities are consuming more power supply than contracted but at the same time also admitted that peak demand had already outstripped actual available capacity. Mindanao Development Authority (MinDA) chair Lualhati Antonino went overboard by saying the power curtailment may just be a manipulation and demanded a congressional inquiry.
But industry and business leaders have pointed out that as early as 2007 power supply and demand equilibrium will have already tilted towards the negative side by 2011 if no new capacities were added into the Mindanao grid.
In 2009, the Philippine Chamber of Commerce and Industry, at the annual Mindanao Business Conference in Koronadal City, said Mindanao needs to add 100 megawatts in new capacity to sustain the island’s economy. Back then, Mindanao’s actual capacity was still at 1,520 megawatts from the 1,850 installed capacities.
But the sale of several generating assets of Napocor greatly diminished available capacities in the island. On Friday, President Aquino said actual capacity has been reduced to 1,180 MW but peak demand was at 1,300 MW. One of the reasons of the thinning available capacity aside from the sale of two power barges owned by Napocor to the Aboitiz-owned Therma Marine Inc. are the reduction of the available and actual capacity of the Pulangi power plants due to silt and the dilapidated state of some Agus hydroelectric plant turbines that need immediate repair. Of course, since 2007, demand also increased. Annual growth in the demand for power supply is pegged between a low of 3.7 percent to as high as 4.5 percent.
Clearly, even with the repair of and rehabilitation of the Agus and Pulangi power plants, Mindanao will still face the specter of rotational brownouts until at least 2014. Future relief, however, will come with big ifs. That is if the 200MW and the 300 MW coal-fired power plant projects of Conal Holdings Corporation and Aboitiz respectively will hit their respective commercial operation targets in 2015.
What is disturbing is the government’s dogged determination to continue with the failed energy policy of its predecessor.
More than 10 years after it was passed, EPIRA has failed to address the energy problem. On the contrary, it exacerbated Mindanao’s power woes. With cheap power supply from hydro sources, the government then neglected if not ignored the development of other sources of energy. This was later abetted by the reluctance of private sector to invest in the power generation business precisely because of the regime of cheap power rates in Mindanao even after the passage of RA 9136. RA 9136 was created to purposely attract private investors in the energy sector. Eleven years after, it has not happened in Mindanao.
President Aquino is bent on the full privatization of Napocor’s remaining generating assets, a move that will eliminate whatever leverage the government has to prevent costs of electricity in the island from ‘spiraling out of control.’
While Aquino was candid about saying that the days of cheap power in the island is coming to an end, he nevertheless ignored growing concerns over the ramification of privatizing Agus and Pulangi power plants.
Cooperatives, especially the smaller ones, have largely relied on these power plants for their supply needs. Once these power plants are handed over to the private sector, they will have to compete with big ticket consumers. These distribution utilities will eventually be made to pay higher rates that they are now enjoying. Otherwise, they could collapse sooner than expected in the face of competition.
Local officials in Mindanao knew the energy problem will make or unmake their political careers. They knew the popular sentiments of their constituents.
Sadly, that cannot be said of the national government.