Breaktime

Fresh power arrangement

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With the mid-term elections just a few days away, or halfway through this single term of our leader Benigno Simeon (aka BS), business now broods over his possible stance in the next three years.

One, will he follow the ways of others before him, instantly becoming a lame duck president after the elections, just coasting along? Or, two, will he damn everybody—and everything else, including his love life—and pursue some unfinished items in his reform agenda?

After all, in his campaign back in 2010, our leader BS talked a lot about honest governance (i.e. “daang matuwid”) and prosperity (i.e. “walang mahirap”), which down here in my barangay really just meant that we would have real jobs.

Now the guys down here actually expect him to leave us a lasting mark, particularly since in 2010 we voted for him, rather overwhelmingly, because of his reform agenda.

Me thinks the Aquino (Part II) administration still has hard work to do in foreign policy, such as the Sabah issue, territorial dispute with powerhouse China, or the thousands of displaced OFWs in war zones abroad.

Internally, the administration must face up to problems of high criminality, interspersed with threats of terrorism from extremist and Marxist groups, and some minor points like hunger, poverty and joblessness.

To think, the Office of the President can have vast power, if our leader BS chooses to wield it to fulfill his promises, as shown by former President Fidel Ramos during the power crisis in the 1990s when Kuya Eddie personally badgered Congress for “emergency powers.”

Besides, if we are to accept as credible the surveys done by SWS and Pulse Asia, which politicians are starting to question in and outside the courts, our leader BS still enjoys an enviable trust rating of 72 percent.

Perhaps he can confidently fight some powerful business groups, for instance, in solving the ongoing power crisis in Mindanao, which still suffers from eight-hour long power outages, or perhaps even in preventing an impending one in Luzon.

In a gathering in Davao City in 2010, our leader BS indeed vowed to end the Mindanao power crisis by building non-fossil clean power plants, but recently business noted that little has been done, of course with devastating outcome for the economy.

Businesses are projecting losses of P300 million due to the long power outages. According to the GenSan Chamber of Commerce and Industry, just one region known as Soccsksargen (South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos City) loses around P100 million a month.

The Mindanao Development Authority even reported that the business losses in the Soccsksargen and Zamboanga are heavier than those in other regions because the two areas do not have reserve power capacity.

To think, in Lanao del Sur, the P25-billion hydro power plant project of Agus 3 Hydropower Corp., or Agus 3 HC, has been hanging for the past two years because of inaction by the Department of Energy.

From what I gathered, during the time of Cabinet Secretary Jose Rene Almendras, who used to be the finance man of the Aboitiz group, Agus 3 HC president Saidamen Pangarungan pleaded with the DOE to pursue the project.

The DOE under Almendras dropped it, and so the proponent reopened its case with the DOE when Almendras was promoted to the newly invented position of Cabinet Secretary and former Leyte governor Carlos Petilla became DOE head, who unfortunately continued to sit on the vital power plant project.

According to Pangarungan, his company already met the government’s kilometric list of requirements for the project, including its acquisition of the 80-hectare site, and permits from the DENR like the environmental clearance certificate, the National Water Resource Board, the National Commission for Indigenous People, and even the LGUs to the last barangay. Moreover, the company forged power purchase agreements (PPA) with electric cooperatives in Mindanao, and it firmed up the financing, meaning direct investments and loans.

But the DOE dribbled the project in the past two years. Almendras and company decided that the project would have to be privatized through a public bidding. Never mind that, as the company noted, the government never put a single centavo in the project, in the first place, and so Almendras wanted to privatize something that the government did not own.

As a result, according to Pangarungan, Mindanao must wait for the completion of the 300-megawatt coal power plant of the Aboitiz group, which would not happen until 2015.

In the meantime, Mindanao must suffer high power rates, since the DOE under Almendras decided to have a fresh arrangement with the Aboitiz group to add power capacity through the prohibitive diesel plants of the group.

Here is the simple math: the power rates of diesel plants are about P14 per kwh, while those of coal plants are about P7 per kwh, but as for hydro plants they are as low as P3 per kwh.

Really, what is the meaning of all that—for whom did Almendras work?

Anyway, the same problem may hound Luzon soon, and the problem is already spooking locators at the Subic free port, according to the Subic Bay Freeport Chamber of Commerce. Luzon really needs new power generation facilities by 2016 —or just in time for our leader BS to make his grand exit—which will only be three years from now.

Based on the 19-year plan of the DOE, the island of Luzon alone will need additional power capacity of more than 10,000 megawatts by 2030. To top it all, in three years or in 2016, Luzon needs new capacity of 600 MW.

Unfortunately, the Court of Appeals just shot down an important power project at the Subic free port, the 600-MW plant of Redondo Peninsula (a.k.a. RP Energy), a consortium made up of Meralco PowerGen, Aboitiz, and Taiwan Cogeneration.

From what I gathered, a party list group known as Kabataan wanted to stop the coal plant project, having gone to the CA for an issuance of the still unexplained concept called “Writ of Kalikasan.”

While the CA threw away the petition for the writ, the court decided nonetheless to cancel the ECC issued by the DENR to RP Energy, plus the lease development agreement (or LDA) that the company forged with Subic Bay Metropolitan Authority.

Why? Well, according to the court, due to wrong procedure!

But the ruling also creates ripples throughout business, and not only in the power generation sector. The ruling in effect tells the business community that the court indeed can cancel the numerous ECCs and the LDAs in Subic free port that the government issued in the past. Is that it?

And the way things look in this country under our leader BS, any fake environmentalist can just challenge those ECCs and LDAs in court, and—presto—they can be cancelled.

Now, in 2015, the world will be watching this country as we host, for only the second time, the Asia-Pacific Economic Cooperation (Apec) meeting, which will naturally be an opportunity for our country to show to the whole world that we mean business.

Down here we shudder to think that our leader BS would not use his vast power to solve a first-class power crisis about to happen in this country.

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  • Victor Magallanes

    The Writ of Kalikasan can easily be abused. All those self-proclaimed environmentalists can ask the courts for its issuance. These “environmentalists” have gone too far in hindering the construction of power plants. I wonder what happened to all those who opposed the building of coal-fire power plants in Mindanao during the last decade. They have been warned that there will be a crippling deficiency in power supply in 2007 but they continued to oppose any construction of power plants. Now, look at Mindanao with its disastrous brownouts. Shall we wait for this scenario to occur in Luzon?

  • http://www.facebook.com/oliver.vicente.9028 Oliver Vicente

    These so-called environmentalist should just move to a place with no electricity because the rest of the country needs/wants electricity in their homes and businesses. Their beliefs should not hinder the country’s development, power shortages will surely scare away investors and we will lose billions.

  • Dominic Carpio

    Just like Jesus Aranza said, big and long-term investments must not be held hostage by cases arising from misguided or unfounded environmental fears, more so when these projects would jumpstart growth and create a lot of local jobs in the long haul—and thus help President Aquino achieve his goal of lasting and inclusive growth for all Filipinos.

    This Writ of Kalikasan just spells conflict for the government. It may be, in some minimal way, trying to protect the environment but it is also pushing us back to the age of the dinosaurs and the dark ages. Power for the business sector is as important as water for the plants. And sadly, this writ will make the effort of getting more investments wither and wilt.

  • Jose Manuel Cruz

    The government should just put those environmentalists in an isolated unpowered, undeveloped area for a year and let’s see if they still rally for their cause. It’s not about being pro or anti-environment, but rather looking ahead in the future. How can the country protect its environment with a struggling economy? It’s like feeding your dog while starving off yourself. With an increased economy brought about by stable energy, the country can then focus in preservation of its natural resources, besides, progress isn’t going to wipe out 100% of our environment, it’s just a matter of proper zoning laws and responsible environmental programs of power corporations.

  • luj olano

    If someone askes “whats the most important technology ever invented?”that wud b ELECTRICITY! and i pity those who were affected by the massive power outage in mindanao.One i heard died from an asthma attack and if only there was electricity he’d probably alive today.

  • http://twitter.com/JillybeanPH Mary Anne Celestino

    Like many aspects of Philippine government, the Writ of Kalikasan is more for showing off than anything else. We already have laws that protect the environment and the rights of the individual. All the Writ does is provide a plaything to any self-professed expert to brand many major entrepreneurial projects as hazardous to the environment.

    As usual, the rabid environmentalists are unmatched at shooting anything down, but they are clueless when it comes to alternatives. Don’t allow a ‘dirty’ coal-fired plant, they say. Okay, genius, so how else do we immediately address our never-ending power crisis?

    The Writ of Kalikasan regards almost any major business as a potential criminal. It’s the old Pinoy mentality of ‘The rich are evil.’ Even if the businesses win their case, how much time will have elapsed, knowing our justice system? (Even those who supposedly won are still hamstrung: Witness the case of RP Energy who actually complied with the law with room to spare, but still had their Environmental Compliance Certificate cancelled for reasons only the spirits know.) What foreign investor wants to wade through all that muck?

    The Aquino government should start hearing alarm bells when the Writ of Kalikasan is waved about. It’s another way of saying Total BS Based on Histrionics and Half-Baked Data to Fulfill a Hidden Agenda. If they cater to such ‘logic’, what’s to stop the other militants from using it on THEM?

    What good are investment upgrades when we’ve got these clowns keeping away the long-term FDIs? Are we going to keep changing horses midstream just to keep on smelling like roses while we’re in office? Who cares what happens after we leave, right? Not our problem anymore.

    Forget popularity ratings. Determine what’s good for the country in the long run, and stick to it, even if it means biting the bullet.

  • http://twitter.com/RobImpe Robie Imperial

    It spooks investors that we keep changing the rules midstream. we should unite towards a single direction, with the govt supporting that agenda for the good of all.

  • http://www.facebook.com/saidamen.pangarungan.7 Saidamen Pangarungan

    Thank you for your kind article on the Mindanao power crisis. I hope the new leadership at the DOE will bid out soon the Service Contract to build the Agus 3 project – which at 240 MW is the biggest in the Agus hydropower grid – as its cheap, clean energy will greatly help solve the Mindanao power shortage. Three years of inaction on our application are long enough to us Mindanaoans who during this period have greatly suffered in terms of businesses losses, the destruction of electrical appliances and the sweltering heat and darkness of the brownouts. If the people, including us Mindanaons, are the real bosses of Pres. PNoy, then their interests should be upheld instead of big business who thru their powerful connections in government are clearly blocking this project.

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