Mindanao faces temporary electricity oversupply

Mindanao is set to experience a reprieve from the power outages that have plagued it in recent years and will, in fact, experience an oversupply of electricity in the coming years, a ranking official of the Alsons Power Group said on Monday.

In a press briefing, Alsons Consolidated Resources Inc. executive vice president Tirso Santillan Jr. said the country’s second-largest island would likely see a surplus of generation capacity, thanks to a number of power plants coming on stream over the medium term, including those owned by the Alcantara conglomerate.

“If you look at the situation in Mindanao on a linear basis, it looks like there will really be an oversupply,” he said, explaining that growth in demand for electricity in Mindanao has historically been at 3 percent a year.

“In general, the growth of power is correlated to gross domestic product growth,” Santillan said. “Mindanao has been one of the fastest-growing areas in the Philippines, so we think that 3 percent is very small.”

The Alsons official noted that even the rate of growth of the entire Philippine economy —pegged at 7.1 percent during the last quarter—was “small” compared to Mindanao’s growth potential, especially now that business activity was picking up on the island after President Duterte assumed power last June.

“We have economists who have told us that [economic growth in Mindanao] should be a multiple of two. That means 14 percent,” he said.

Santillan likened the coming electricity oversupply in Mindanao to the one experienced in the Visayas a few years ago, specifically on the central island of Cebu.

“When they built the power plants there a few years ago, they were facing an oversupply situation as well,” he said. “But in about two years’ time, the oversupply disappeared because of the uplifted demand.”

Santillan said the company’s view was validated by what they experienced this year in Zamboanga City where electricity consumers are served by Alsons’ Western Mindanao Power Corp. generation plants.

“Between December 2015 to June of this year, when the main capacity of WMPC was made available, demand grew by about 18 percent,” he said. “So fast growth is possible.”

“Remember the saying: If you build it, they will come,” Santillan said. “So we think there will be an oversupply, but it will be short-lived.”