Gov’t urged to fend off Luzon’s looming power problems

Some of the largest investment hubs in Luzon—including the Subic Bay Freeport Zone—may incur massive financial losses, the same as that suffered by Mindanao-based businesses, if the government were to fail in taking decisive steps to meet rising power demand in these areas.

According to freeport zone locator and Eastern Petroleum chair Fernando Martinez, demand for electricity in Subic and elsewhere may rise by a much faster pace once recent investment upgrades translate into an influx of foreign direct investments (FDIs).

“There is a need to address the ever-growing [power demand], especially here in Metro Manila and Luzon, where demand growth outpaces that of the whole country,” Martinez said in a statement. “We cannot risk having businesses and industries in the area suffering the same fate as those in Mindanao.”

Eastern Petroleum operates a large gas station at the Subic freeport zone alongside a nationwide retail network that includes electricity-starved Mindanao.

Martinez pointed out that the Luzon-wide blackout earlier this month underlined the critical supply level in the metropolis and the country’s largest island, as well as the urgency for the government to put a premium on expanding its energy infrastructure.

This energy infrastructure will help ensure long-term power stability, especially in special economic zones like Subic, where investors are expected to flock following the country’s attainment of investment grade FROM Fitch, Standard & Poor’s and the Japan Credit Rating Agency.

From his own experience as an investor, the Eastern Petroleum chief said that stable and reliable power supply would spur more industrial and consumption activities, all of which would help the economy grow faster.

“At the same time, we want to keep Subic as an investment and tourism hub that will spur more earnings not only for our business, but also for other locators and investors,” he said.

Martinez believes that “power generation projects already onstream or still on the drawing board should be put on the fast lane” to augment the current supply of energy in the Luzon grid, especially after the Department of Energy projected that the island group would need 600 megawatts of new capacity three years from now.

One such project that could readily meet this demand is the coal-fired power plant of the Redondo Peninsula Energy (RP Energy) consortium at the Subic Bay Freeport.

In its 19-year Philippine Energy Plan, the DOE forecasts a 4.8-percent annual increase in power demand in the Luzon grid by 2030. This will mean an additional capacity requirement of 10,500 MW.

In the medium-term, the DOE projects that Luzon will require an additional 600 MW every year, starting 2016, to meet the demand and required reserves. The Luzon grid currently has an installed capacity of 11,739 MW and a dependable capacity of 10,824 MW.

Martinez’ concerns over the power supply were aired as early as last year by Subic Bay Freeport Chamber of Commerce president Danny Piano, who said that the Mindanao crisis could spill over to Metro Manila if the government failed to accelerate investments in the power sector.