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Supply by night

business / Columnists
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Supply by night

Seven years from now, right after the term of the motorbiking Duterte Harley, the Philippines could be facing another power crisis.

By 2024, based on the projection of our own Department of Energy, the Malampaya natural gas field would be empty.

Gone with the gas would be some 2,000 megawatts of power that Malampaya provides at present to the power plants in Batangas owned by First Gen of the Lopez group.

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That could mean dark nights for us without the Malampaya-generated electricity to light up our homes and streets.

Thus, even the forum “Asean+3 Oil Market and Natural Gas,” hosted by the Department of Energy here this week, featuring the 10 Asean members plus China, Japan and South Korea, natural gas was the hot topic.

Energy Undersecretary Cristino Posadas explained the Philippines would import LNG, or liquefied natural gas, and the DOE had asked Congress to enact laws for what Posadas called “LNG infrastructure.”

Just to produce substitute power for Malampaya, such as through new coal-fired plants, the Philippines would invest more than P150 billion—and very soon.

The DOE also estimated that, in the next 20 years, the Philippines would need an additional 43,000 MW of generation capacity, on top of the present capacity of about 20,000 MW. Total cost: At least P3 trillion.

The administration of Duterte Harley would have to tap the private sector in its “build build build” infrastructure program.

But the administration seems to be going the other way.

By the way, we received a reaction from Angelito Lantin, SVP of MGen, the power generation subsidiary of Meralco, to our column,” Supply me to the moon,” on May 15:
“Please allow us to explain that RP Energy and Meralco never tried to influence the ERC’s action on its Power Sales Agreement (PSA) application.
“Rest assured that pressuring the ERC to act expeditiously on the PSAs, is the furthest thing from our minds: this runs contrary to the good governance mind-set of RP and Energy, and Meralco.

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“MGEN Angelito Lantin’s statement that subsidiary RP Energy would secure the ERC approval by this month (actually the statement, part of the regular project updates report during Meralco’s first quarter financial and operating results, was that “ERC approval of the PSA is expected to be secured by May 2017”) was made purely on the basis that the PSAs had been been filed more than a year ago.

“Lantin was stating that the project, which had been suffering from significant delays, may already be near approval.

“RP Energy submitted the application to the ERC for a PSA in April 29, 2016. Negotiations prior to the submission of the application had been quite rigorous, and took years to complete.

“RP Energy completed all activities required to commence construction of its project. It acquired construction contracts, financing and permits in place. The only missing piece is PSA approval by the ERC. Once secured, the construction of the power plant can start promptly.

“Finally, please rest assured that RP Energy’s expected receipt of the PSA is not connected in any way to the [May 2] suspension of ERC Chair Jose Vicente Salazar.

“RP Energy is not aware of the opposition of Mr. Salazar, or any commissioner, to its application.

“We feel for the ERC as it performs its job under tremendous external pressure from several interest groups and recently, also with internal strife.

“We agree with you that it performs a critically important role in the country’s power infrastructure and security. The performance of their job must not be delayed or stopped, or unduly influenced by anyone, otherwise, the country will suffer the dire consequences of delay or stoppage of power supply.

“Bottomline: PSAs are a vital component to every power plant project.

“Without sufficient power plants operating to produce the required baseload of the country, the Duterte government’s infrastructure thrust will not happen as projects under will need ample power supply to efficiently work.”

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TAGS: Department of Energy, Malampaya natural gas, power crisis
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