Sale of remaining state power assets pushed

A group of independent power producers is urging the government to pursue the sale of the state’s remaining power generation assets, saying that privatization will foster a conducive business environment that will encourage companies to invest in the energy sector.

In a statement, the Philippine Independent Power Producers Association (Pippa) said such a move would, more importantly, help resolve the lingering power problems in Mindanao.

“The momentum of privatization, as envisioned in the Electric Power Industry Reform Act, should not be dampened. Otherwise, power developers will not build plants in  places where they are most needed, like Mindanao,” Pippa stressed.

The group said the privatization of the government’s power generating assets and contracted capacities from independent power producers had since resulted in a competitive power market in Luzon and Visayas.

It likewise encouraged companies to infuse more investments into the power generation sector.

Several business groups—such as Ayala Corp., Trans-Asia Oil and Energy Development Corp., Manila Electric Co., through power generation arm Meralco Powergen, Team Energy, Aboitiz Power Corp., First Gen Corp., San Miguel Corp., Global Business Power Corp. and GN Power—have announced plans to construct new facilities and expand existing plants to generate more than 2,000 megawatts (MW) of additional capacities.

Also, Pippa urged the government to establish a wholesale electricity spot market (WESM) in Mindanao and pursue the P24-billion Leyte-Mindanao Interconnection Project (LMIP) to increase power supply to the electricity-starved island.

The interconnection project will include putting up a 250-kilovolt high-voltage density cable bipolar link with a total transfer capacity of 500 MW, a 455-kilometer long overhead line and 23-km submarine cable. It will start at the Ormoc Converter station in Leyte and end at the Kirahon Converter station in Northcentral Mindanao via Southern Leyte and Northeastern Mindanao.

The LMIP is considered a crucial project as it will pave the way for a national grid interconnection. Currently, only Luzon and Visayas are interconnected, thus isolating the Mindanao grid. The LMIP would also allow the Philippines to become part of the much larger Asean grid via the Sabah-Philippines grid interconnection.

In the meantime, Pippa stressed the need for the commercial operation of a WESM in Mindanao.

This, the groups said, will allow the excess or uncontracted capacities to be made available to the grid via trading and, thus, alleviate power shortage in times when hydro power plants could not supply the needed capacity.

At present Mindanao relies heavily on the hydropower complexes, which provide more than half of its electricity requirements.