APRIL 18, 2013

18 Apr

Filinvest unit to put up P30B plant in Misamis Oriental

FDC Utilities seeks to ease power crunch in Mindanao

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FDC Misamis Power Corp., a unit of the Gotianun group’s Filinvest Development Corp., is investing P30 billion to put up a 405-megawatt thermal power plant at the Phividec Industrial Estate in Misamis Oriental.

At the Palace on Wednesday, President Aquino witnessed the signing of the multibillion-peso deal between Phividec Industrial Authority, a government-owned and -controlled corporation, and Filinvest Development Corp. (FDC) Utilities Inc. for a 28-year lease contract covering an initial 84.4 hectares of land in Villanueva, Misamis Oriental.

The leased portion of Phividec’s industrial estate will become the site of a coal-fired power plant that will provide additional energy supply to power-starved areas in Mindanao.

Phividec stands for Philippine Veterans Investment Development Corporation.

In a statement, Filinvest Development Corp. said the thermal power plant of its wholly owned subsidiary FDC Utilities Inc. will make use of “clean coal technology.”

FDC Utilities said it would try to complete the first phase of about 270 MW by 2016, to help ease the worsening power supply crunch in Mindanao. The second phase of 135 MW may become operational by 2018, in time for the expected surge in power demand on the island.

FDC warned that unless new power plants are built, the Mindanao power situation will become worse. As a result, investments will not come in, jobs will be lost, factories may shut down, and the people of Mindanao will experience blackouts of up to six hours a day by 2014.

The last major power plant built in Mindanao was the 232-MW coal plant back in 2006.

“Investment in power facilities in Mindanao is essential to ensure that economic growth is equally enjoyed on the island as the country gears up for a more robust economy. With a total of 405 MW of power, FDC Misamis becomes a key player in helping address Mindanao’s need for more stable and affordable electricity supply,” FDC Utilities explained.

The construction of the power facility is expected to help the local economy by creating more jobs, increasing business activities in the area, and generating more taxes, among others, it added.

With FDC Utilities, the Filinvest Group marks a reentry into the power market. The group has accumulated experience in the power industry since 1995 through the ownership of East Asia Power Corp. and Cebu Private Power Corp.

The three-year-old company targets to bring electricity and water to potential growth circles in the Philippines. It aims to spur or further enhance development in communities all over the country while enhancing synergy among the subsidiaries of the Filinvest Group.

FDC Utilities plans to initiate multiple power-generation projects over the next five years, of which the priority would be the 405-MW power plant in Misamis Oriental.

According to a Palace briefer, the FDC Misamis plant will utilize a “circulating fluidized bed boiler” (CFB) coal-fired power plant—a technology that reduces the sulfur dioxide emission as well as nitrogen oxide to negligible levels, thus reducing the power plant’s impact on the environment.

However, the technology will still utilize fossil fuel (coal) to generate electricity, and will thus contribute to global warming.

In his message following the signing ceremony, Aquino said Filinvest’s Misamis project would constitute a significant part of the long-term solution to Mindanao’s energy problems.

Since 2010, the Aquino administration has been making structural changes in the power sector, encouraging the private sector to come in and put up power plants.

Sultan Bolkiah of Brunei Darussalam, who met with the President in Malacañang last Tuesday, also revealed plans to bring natural gas to Mindanao.

Iligan diesel plant rehab fast-tracked

Alcantara group eyes September activation

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The Alcantara group is racing to complete by September this year the P1.2-billion rehabilitation of the Iligan diesel power plant to help ease the worsening power crisis in Mindanao.

The group, through its subsidiary Mapalad Power Corp. admitted, however, that it will be a “tough job” to ensure the full operation of the facility at 98 megawatts due to poor maintenance records and the scarcity of parts in the market.

“It is a tough order, but we will try our best to deliver the most we can in the shortest possible time,” Mapalad power plant manager Ruben Ramilo said in a statement.

Once the 30-year-old diesel-fired power plant resumes operations this September, the electricity produced by the plant will be the “first solid action on the ground to address the four- to eight-hour daily brownouts in Mindanao that has left large communities and businesses reeling.”

According to Alsons Power Group VP for operations Edgar D. Sevilles, Mapalad began the rehabilitation work only last March 11, 2013. The diesel-fed facility is expected to begin operating on a ramp-up basis within this month, thus providing electricity-starved Mindanao with an additional power source.

“Restoring the diesel generating units back to its optimum condition is not an easy task. We have to verify which unit needs major overhaul and which unit needs only minor overhaul,” Sevilles explained.

“The problem is that we do not have complete historical data that will tell us how these units were operated and maintained by the previous operator. We’ll have to make assumptions and random inspections in order to map out plans of action for each unit and for all other auxiliary equipment and facility,” he added.

Another stumbling block, according to Sevilles, is the availability of replacement parts and equipment especially for the electrical items.

“Some of these items are already obsolete and are no longer available in the market and thus need to be completely replaced with updated models. Some would take around three to four months for the suppliers to deliver these items, so we’ll have to consider this lead time in projecting our load ramp up schedule. But as we have said, we will try our best to stay on track with our target schedules despite these difficulties,” Sevilles further explained.

Mapalad Power has already signed power sales agreements with various distribution utilities and electric cooperatives in Mindanao. These agreements cover roughly 90 percent of the 98-MW targeted output of the Iligan plant.

The Iligan diesel facility was originally developed and operated by the Alcantara Group through its subsidiary, Northern Mindanao Power Corp. (NMPC), under two energy conversion agreements with state-run National Power Corp.

The power units were then turned over to Napocor at the respective expirations of the two agreements in 2003 and 2006 and were subsequently acquired by the City of Iligan in 2007. Napocor continued operating the plants until 2010.

Aquino blames Mindanao leaders for power crisis

 BY RAPPLER.COM
POSTED ON 04/17/2013 6:40 PM  | UPDATED 04/18/2013 10:06 AM

MORE POWER. President Aquino at the ceremonial signing for a power generation facility in Misamis Oriental. Courtesy of Malacanang Photo Bureau

MORE POWER. President Aquino at the ceremonial signing for a power generation facility in Misamis Oriental. Courtesy of Malacanang Photo Bureau

MANILA, Philippines – The power crisis that is plaguing Mindanao is a consequence of the sins of the region’s past leaders, President Benigno Aquino III said.

In a speech on Wednesday, April 17, he cited how the legislators from Mindanao pursued “temporary convenience [that] trumped preparedness for the future.”

“As you may know, the energy situation in Mindanao did not arise overnight. Trouble began brewing when — and I am sorry to say this — a number of legislators from the region, and other leaders, wished to be exempted from the Electric Power Industry Reform Act of 2001 (Epira),” he said during a contract signing between state-owned industrial park Phividec and Filinvest Development Utilities, Inc.

“This divorced Mindanao from the Republic Act that allowed Napocor (former state power monopoly National Power Corp.) to sell its plants to private investors, using the proceeds to reduce its debt,” he stressed.

Epira was meant to restructure and privatize what was then an inefficient and state-owned power industry, and increase competition, with the end goal of bringing power rates down.

Cheap power

Aquino pointed out that the efforts done then by the leaders of Mindanao — which sources about half of its power supply from cheap hydro-based resources — neglected basic market and economic realities.

“Back then, leaders from Mindanao sought to continue taking advantage of the massive hydro resources in the area, with, unfortunately, the dangerous assumption that the cheap hydro power could last forever. They neglected the fact that the hydropower plants are machines that need to be maintained, improved, and if not replaced, especially if they are to meet the increasing demand,” he said.

“Instead of actively protecting the source of hydropower, illegal logging was allowed to continue, watersheds were lost, which, compounded with the effects of climate change, significantly limited the amount of power that could be produced,” he noted.

“This focus on maintaining cheap power in an unsustainable manner also scared away investors, who did not have the confidence to set up alternative power resources in Mindanao,” he added.

This was a sentiment shared by the Aboitiz group in an investment briefing in February. Erramon Aboitiz, president and CEO of Aboitiz Equity Ventures, had cited Napocor, the operator of the Agus-Pulangi hydropower complex, as the reason why the group, one of the biggest power players in the Philippines, held back in investing in Mindanao decades ago.

With the water that flows from the Lanao lake and Agus river system, the power plant offered the lowest rates in the country.

Analysis paralysis

Blaming the past and not acting fast enough based on the symptoms of a looming power problem is a common analysis among Mindanao watchers.

In an April 11 forum, economist Gerardo Sicat said the power crisis is happening because “the government failed to pursue the series of long-term actions required to solve the power development problems of Mindanao.”

In a research paper, Sicat blamed the power crisis on the following factors:

  • Mindanao’s electricity distribution grid was not connected to the grids of Luzon and Visayas.
  • The base load of power generation for the region was not increased sufficiently.
  • “Snail-paced” decision-making for undertaking approvals
  • Privatization of government power plants through the Electric Power Industry Reform Act did not push through

“The signs had been known by all concerned for years, especially by the national government. Inaction on the required policy front meant that the day of reckoning would simply arrive and blow up the picture. That has now become a reality. Government inaction to do the right thing was due to a paralysis of decision-making,” he said.

President Aquino inherited the problem when he took over in 2010.

Power projects

Aquino said that with all the power projects in the pipeline for Mindanao, he expects the power shortage to be over by 2015. He cited two coal-fired power plants from Aboitiz scheduled for completion in late 2015. The plants, which are located in Davao, will provide a total of 300 megawatts. The 3 plants from Filinvest, on the other hand, are expected to provide a total of 405 megawatts.

“With the energy these plants will be producing, by 2016, we expect production capacity to be almost 470 megawatts above peak demand. Nakakataba po ng puso ‘pag nangyari na nga po ‘to, kaysa ngayon na four megawatts above demand ‘pag sinuwerte (This would make me happy if this happens, unlike now where we get four megawatts above demand if we’re lucky).

The Mindanao’s power crisis has caused power outages that average 8 hours per day. This is due to a power shortfall of 294 megawatts (MW).

The region’s actual supply is only at 863 MW, which is not enough to cover demand at 1,157 MW

Phividec and Filinvest signed a 28-year lease agreement for 84.4 hectares of land in Villanueva, Misamis Oriental. Filinvest will construct a coal-fired power generation facility worth P29-P30 billion. - Rappler.com

Brownouts to hit parts of Makati

 BY CHRISTIAN BAUTISTA
POSTED ON 04/17/2013 8:29 PM  | UPDATED 04/17/2013 8:38 PM
 BROWNOUT. Some parts of Makati will be without electricity from 11:30 pm to 4:30 am. Photo by AFPBROWNOUT. Some parts of Makati will be without electricity from 11:30 pm to 4:30 am. Photo by AFP

MANILA, Philippines – Parts of Makati will be without electricity from 11:30 pm on Wednesday, April 17, until 4:30 am on Thursday, April 18.

According to an advisory from Manila Electric Co. (Meralco), the power outage is meant to give way to maintenance work of the company’s power distribution facilities.

Meralco will be replacing rotten poles and conducting line rehabilitation work along Emilia St. in Barangay Palanan. It will also perform line reconstruction work along Malugay St. in Barangay San Antonio.

The affected areas are the following:

Brownouts scheduled from 11:30pm to 11:59pm and then from 4am -4:30am.

- Portion of Emilia St. from Florida St. to Marconi St. including Araro, Bermeo, Cuenca, Bautista, Durango and Hilario Streets.

- DOHLE Phils. and Scandic Palace Suite in Barangay Palanan

Brownouts scheduled from 11:30pm to 4:30am.

- Portions of Malugay St. from near Chino Roces Ave. (Pasong Tamo) to South Luzon Expressway including Caltex Gas Station, KFC Restaurant and Avida Makati Towers I in Barangay San Antonio

- Portions of Emilia St. from South Luzon Expressway to Dian St. in including Kalayaan Engineering Bldg. and Cash & Carry Mall; Guernica, Ibarra, Matanzas and Filmore Sts. in Barangay Palanan

- Portion of Filmore St. from Emilia St. to Ampere St. including Calatagan, Dian, Hilario, Bautista, Casino, Madras, Makiling, Olivares, Enrique, Fahrenheit, Inca, Enthoven, Diesel, Curie and Boyle Sts.; TIM Bldg., Palanan Barangay Hall and Health Center, C & L Mansion, Continuous Printing Shop, Control Printing Press, P & L Condominium and TSM Bldg. in Barangay Palanan.

- Portion of Dian St. from Zobel Roxas Ave. to Emilia St. including Ampere St., Datacom Bldg., MCJUD Properties Condotel Bldg. and St. Claire Hospital and Nursery in Barangay Palanan.

- Portion of Se. Gil Puyat Ave. from South Luzon Expressway to Tramo St. including Filmore St. and Sayoc Bldg. 100 in Barangay Palanan. – Rappler.com

EDC begins wind project

By Lailany P. Gomez | Posted on Apr. 18, 2013 at 12:01am | 302 views

Energy Development Corp. said Wednesday it broke ground for the 87-megawatt wind project in Burgos, Ilocos Norte following the signing of a contract with wind turbine supplier Vestas of Denmark in March.

EDC said the project was its first foray into the wind energy business, after being a geothermal leader over the past 36 years.

EDC and Vestas signed an engineering, procurement and construction contract for the project, which will be built in an area covering 600 hectares across three barangays: Saoit, Poblacion and Nagsurot.

The wind farm will have large-scale Vestas V90-3.0-MW wind turbines and ancillary plant to be supplied and constructed by Vestas, which is the largest wind turbine manufacturer in the world.

EDC said the Burgos wind project, which was expected to be operational next year, would ensure power stability in the Luzon grid, generate jobs and livelihood opportunities in the region, boost tourism in the province and improve economic activity.

“The project will spur development in Ilocos Norte by attracting more investments and eventually create more and better opportunities for the residents. In all the areas where EDC operates, we take pride in being able to help improve the living conditions of our host communities in parallel with the progress of their barangay, municipality, city, and province,” EDC president and chief executive Richard Tantoco said.

The company said once operational, the wind project would generate about 233 gigawatt-hours annually and power over a million households.

EDC breaks ground for Philippines’ biggest wind farm

By: Euan Paulo C. Añonuevo, InterAksyon.com
April 17, 2013 4:39 PM

MANILA – Energy Development Corp (EDC) broke ground for the company’s $300 million wind farm project in Burgos, Ilocos Norte.

In a disclosure to the Philippine Stock Exchange, EDC said it has concluded groundbreaking ceremonies for the 87-megawatt project.

The announcement follows a deal the company signed with Vestas Wind Systems A/S for the supply of wind turbines for the project last March.

The Burgos wind farm covers approximately 600 hectares, straddling the barangays of Saoit, Poblacion, and Nagsurot. The facility will have large-scale Vestas V90-3.0 megawatt wind turbines and an ancillary plant to be supplied and constructed by the Danish firm. Vestas is the largest wind turbine manufacturer in the world.

Once operational, the wind farm is expected to generate approximately 233 gigawatt-hours a year and energize over a million households.

It will augment the Luzon grid’s dependable capacity, as the grid needs an additional 4,200 megawatts in the next 10 years amid the projected 4.5 per cent annual increase in electricity demand.

Richard B. Tantoco, EDC president and chief operating officer, said “the project will spur development in Ilocos Norte by attracting more investments and eventually create more and better opportunities for the residents.”

The Bugos project, which will be the largest wind farm in the Philippines once completed, will also contribute to the displacement of an equivalent of 129,000 tons of carbon emissions or roughly half a million barrels of oil.

Aside from the wind farm, the Burgos project also includes a 115-kiloVolt transmission line connecting the facility from the Burgos substation to the Laoag substation of the National Grid Corp of the Philippines (NGCP).

EDC is the world’s largest integrated geothermal producer and one of the leading renewable energy companies in the Philippines with a portfolio of 1,130 megawatts of geothermal and 132 megawatts of hydroelectric plants. The 87-megawatt Burgos wind firm is the company’s first foray into the wind energy business.

Vivant-led group to build oil-fired power plants in Calamian Islands

By: Euan Paulo C. Añonuevo, InterAksyon.com
April 18, 2013 3:28 PM

 MANILA – A consortium led by Vivant Corp is putting up oil-based power plants in the Calamian Islands to improve electricity supply in the area.

In a statement to the Philippine Stock Exchange, Vivant said Calamian Islands Power Corp (CIPC) broke ground for the construction of a 750 kilowatt diesel- and an 8 megawatt bunker-fired power plant in Busuanga and Coron towns, respectively.

CIPC is a joint venture between Vivant unit Vivant Energy Corp and Gigawatt Power Inc.

Commercial operations of the CIPC plants are expected to commence next year. The power facilities will supply the requirements of Busuanga Island Electric Cooperative Inc (Biselco), which distributes electricity in the island-group that includes the municipalities of Coron, Busuanga, Culion and Linapacan in northern Palawan.

Biselco earlier signed a 15-year supply agreement with CIPC due to state-owned National Power Corp’s inability to secure its electricity requirements.

Both plants will provide the full service and ancillary power requirements of Biselco under a bilateral power supply contract for the next 15 years from the plants’ commercial operations.

Besides CIPC, Vivant also has a stake in Cebu Private Power Corp, Cebu Energy Development Corp and Visayan Electric Co Inc in Cebu, as well as in Delta P Inc in Palawan.

Meralco, First Pacific keen on expanding overseas power plant portfolio, exec says

By: Euan Paulo C. Añonuevo, InterAksyon.com
April 18, 2013 3:03 PM

MANILA – Meralco and First Pacific Co Ltd are scouting for other power projects abroad after their first joint foray into Singapore, an executive said on Thursday.

On the sidelines of the Bank of the Philippine Islands (BPI) annual stockholders’ meeting, Manila Electric Co president Oscar S. Reyes told InterAksyon.com that unit Meralco PowerGen Corp plans to team up with the Hong Kong-based First Pacific for other projects outside the Philippines.

“Overseas, we’ve closed Singapore. Our stake there is to the extent of 40 percent of the 70 percent that our consortium with First Pacific acquired. Together with this consortium, we are trying to identify other opportunities,” Reyes, who also sits on the BPI board, said.

Last month, Meralco PowerGen and First Pacific, through their joint venture FPM Power Holdings Ltd, acquired from Singapore’s GMR Group a 70-percent stake in an 800-megawatt liquefied natural gas (LNG) power plant for $488 million.

Notwithstanding their interest in overseas projects, building 2,700 megawatts of capacity in the Philippines remains a priority, Reyes said.

Meralco PowerGen unit Redondo Peninsula Energy Inc is developing a 600-megawatt coal plant in Subic. The Meralco subsidiary is also considering LNG power facilities in other parts of Luzon.

“We hope to complete the feasibility studies within the next three to six months,” Reyes said.

Meralco is also keen on pursuing power projects in Mindanao in partnership with the Metrobank Group, which already has a portfolio of power plants in the Visayas.

“The projects continue to be under study. They are the ones who basically identified the projects and asked us to partner with them. These are for Mindanao, mainly coal-fired power plants in various parts of Mindanao. They’re not too large, they’re of a size suitable for the grid pero wala pang specific,” Reyes said.

Meralco is chaired by Manuel V. Pangilinan, who also sits at the helm of TV5, of which InterAksyon.com is the online news portal.

Ayala, Phinma groups bag rights to sell output of joint-venture coal power plant

By: Euan Paulo C. Añonuevo, InterAksyon.com
April 18, 2013 2:20 PM

File photo of coal power plant

MANILA – The Ayala and Phinma groups will take up the output of their joint venture coal-fired power plant in Calaca, Batangas.

In separate disclosures to the Philippine Stock Exchange, Ayala Corp and Trans-Asia Oil and Energy Development Corp said their joint venture company, South Luzon Thermal Energy Corp (SLTEC), signed a power supply deal with Trans-Asia.

Under the agreement, SLTEC will sell the output of its second 135-megawatt generating unit to Trans-Asia for for 13 years at undisclosed terms.

In turn, Trans-Asia, which controls the output of the coal project’s first 135-megawatt generating unit, signed a power supply agreement with DirectPower Services Inc, a unit of the Ayala group that holds a retail electricity supplier (RES) license. DirectPower will purchase up to 106.71 megawatts for peak demand for 11 years at undisclosed rates once open access commences in the power sector.

RES license-holders buy electricity from power suppliers and sell to consumers that qualify for the open access regime, which is set to start on June 26. Initially, only consumers that use up at least one megawatt of electricity can qualify for open access.

SLTEC expects to complete the first 135-megawatt generating unit of the project by the third quarter of 2014. The second generating unit is scheduled for completion by 2016. The project would cost P22 billion.

AboitizPower overcharged Mindanao residents by P392 million, NGCP says

By: Euan Paulo C. Añonuevo, InterAksyon.com
April 17, 2013 4:49 PM

Aboitiz Power’s Barge 117

MANILA – The National Grid Corp of the Philippines (NGCP) on Wednesday said Aboitiz Power Corp had overcharged Mindanao residents some P392 million.

In a petition filed before the Energy Regulatory Commission (ERC), NGCP said AboitizPower, through unit Therma Marine Inc (TMI), charged beyond what Mindanao residents owed for ancillary service, also called back-up power. TMI operates the Aboitiz group’s power barges.

“The submission is in compliance with ERC’s order directing NGCP to compute TMI’s [ancillary service] costs to pave the way for the latter’s refund to consumers for the resulting overbilling,” the private operator of the country’s power grid said.

The ERC earlier reduced the tariff charged by TMI after Cagayan Electric Power and Light Co asked that the Aboitiz firm be barred from using the appraised value of its power barges for the computation of capital recover fees.

In line with this, the regulator directed NGCP to compute the amount TMI has to refund consumers. The ERC, in turn, will determine how the amount will be reflected in consumers’ electricity bills.

NGCP previously sourced back-up power supply from TMI’s Power Barge (PB) 118 and PB 117.

The grid operator collects the cost of power charged by ancillary service providers from consumers and remits it back to these firms.

“In relation to these contracts, NGCP does not earn revenue from [ancillary service] billed as these are ‘pass through’ charges. Any collection we make from our customers are remitted entirely to TMI. Also, in this particular case, NGCP also bore the risk of collection. NGCP must pay the entire amount billed by TMI, even if they are unable to collect the full amount,” Cynthia Perez-Alabanza, NGCP spokesperson, said.

Kepco aids ECs with equipment

By Myrna M. Velasco
Published: April 18, 2013

Below-par operational efficiencies have been plaguing many Philippine electric cooperatives, hence, the donation of equipment by Korea Electric Power Corporation (Kepco) may provide slight relief to power utilities with such dilemmas.

The South Korean power firm, as announced by the National Electrification Administration (NEA), donated power distribution equipment to 17 electric cooperatives. Such collaboration was built upon goals of “boosting the operational efficiency of the ECs.”

According to NEA Administrator Edita S. Bueno, “these distribution equipment will help meet (the ECs) technical requirements in the maintenance and improvement of their system at a lower cost.”

The donation was formally concluded in a signing ceremony led by the NEA chief and Kepco director general Hong-bin Yim. It was also witnessed by Kepco Philippines president Kyu-byeng Hwang and NEA deputy administrator Edgardo Piamonte.

The items donated include power transformer, gas circuit breakers, vacuum circuit breakers, disconnection switches; gas load break switches; protection panels; battery chargers and storage batteries.

The beneficiary-ECs are those from Cagayan Valley, Bukidnon, Kalinga Apayao, Occidental Mindoro, Sorsogon, Oriental Mindoro, Central Negros, Quezon, Camarines Sur, Davao del Sur; Benguet, Cotabato, Agusan del Sur, Central Pangasinan and Biliran.

NEA has emphasized that the beneficiary-utilities “will shoulder the cost of dismantling, refurbishment and shipment of these equipment.” So far, the estimated value was at $960,000.

The electrification agency articulated that the amount for the ECs would “only be about 26.67-percent if these equipment were to be purchased brand new which is around $3.6 million.”

PCCI’s position optimize fossil fuel power plants in Mindanao

 By Bernie Cahiles-Magkilat
Published: April 18, 2013

Mindanao business leaders have urged the optimization of fossil fuel power plants as this is the fastest way to alleviate the worsening power supply in Mindanao.

This was raised by Mindanao leaders of the Philippine Chamber of Commerce and Industry (PCCI) during a recent meeting with the PCCI national leadership recently to discuss possible strategies in response to the continuing rotating brownouts that have been hounding Mindanao for three years now.

A briefing conducted by Romeo Montenegro of the Mindanao Development Authority-Mindanao Power Monitoring Commission (MinDA-MPMC) showed that even if the 15-MW of Iligan Diesel Power Plant (IDPP) is already in operation this month, the resulting available capacity of 1,266 MW will still be 76 MW short of the projected peak demand of 1,299 MW. And except for areas with embedded power generation capacity, daily power outages is bound to persist until 2016 when new coal-fired power plants presently under construction will go on stream.

One of the solutions presented at the meeting by Engr. Robert Mallillin, chairman of the PCCI Power Committee, is to make coal-fired, geothermal, and diesel plants as baseload generators and to use the hydro plants during peak hours.

Based on his estimates, the peak-hour requirement of the whole of Mindanao is at 1,134 MW as against the total generating capacity of 1,884 megawatts available if fully explored and utilized, with diesel contributing 650 MW, hydro at 924.1 MW and coal, geothermal and RE at 308 MW. This, Mallillin said, should leave Mindanao with excess capacity of some 750 MW.

The power shortage has endured, Mallillin said, because of the policy of using hydro as baseload plant and hence first to be dispatched, which led and continue to lead to the under-utilization of diesel-fired power plants.

Amending the dispatch protocol to allow coal, geothermal and diesel to be dispatched first as baseload plants will encourage fossil fuel plants to run at full capacity. In the short-term, it will also raise electricity cost in Mindanao by approximately P1.25 more or less per kilowatt-hour. But this will only be until the coal-fired plants are connected to the grid to replace the costlier diesel plants used as baseload sources of power and assign them later to the cold reserve category.

Meanwhile, Ricky Juliano, PCCI Vice President for Mindanao, clarified that Mindanaoans are not opposed to higher rates from the outset as erroneously reported in many broadsheets since they have known and accepted that the long-term response to the power shortage is the entry of fossil plants. But he stressed that what the Mindanaoans request is to optimize the capacity of the more competitively-priced hydroelectric power plants in Mindanao in order to average down the effect of the higher-cost fossil plants.

Agus, Pulangui hydropower plants Hold privatization of Mindanao assets

 By Myrna M. Velasco
Published: April 18, 2013

Business groups in Mindanao are supporting proposals to temporarily stop the Power Sector Assets and Liabilities Management Corporation (PSALM) from divesting the remaining government power assets in the area.

This was set forth by the Mindanao Business Council, which is an aggrupation of 44 local business chambers and 11 major industry sectors.

It noted that it is supporting the policy proposal of the Mindanao Development Authority (MinDA) to President Aquino stopping PSALM “from selling Mindanao power plants to private operators.”

The privatization of the Agus and Pulangui hydropower assets had been one of the recommendations during the 2012 Power Summit in Mindanao. However, several technical as well as legal hurdles have been preventing PSALM from moving forward with the divestiture plan.

It was similarly noted by MinDA that a provision in the Annex of the Bangsamoro Framework Agreement may eventually stall any plan to privatize the Agus hydropower complex. This was based on the ownership implications of Lake Lanao, which is the major source of water utilized for the Agus plants.

MinDA, along with various stakeholders have been scouring for short- to long-term solutions to finally end the lingering brownout woes of Mindanao consumers.

The latest undertaking it had so far was “cloud seeding operations over Lake Lanao,” purposively to trigger rains and increased water inflow for the Agus complex.

It noted that “a team of cloud seeding experts from the Bureau of Soils and Water Management of DA (Department of Agriculture) has been dispatched to the area to assess the viability of weather condition and cloud formation for the cloud seeding operations.”

According to MinDA chairperson Luwalhati Antonino, “the cloud seeding is among the recent recommendations presented to the President as part of the government’s quick measures to bridge power supply shortfall in Mindanao.”

While state-run National Power Corporation (NPC) has been trying to maintain a reliable water elevation for the Agus complex, an increased rainfall triggered through cloud seeding would be able to improve water inflow; and this could shore up the capacity of the hydro generating units to 500 megawatts from 450MW.

P30-B Project to address Mindanao blackouts

 By Madel Sabater Namit
Published: April 18, 2013

NEW POWER PLANT IN MINDANAO –President Benigno S. Aquino III witnesses the signing of a land lease agreement between Phividec Industrial Authority (PIA) and the FDC Misamis Power Corp. in Malacañang on April 17, 2013, for the lease of land for the construction of a coal-fired power plant that will generate on initial 270 megawatts of electric power, targeted to operate in 2016. Seated with the President are Defense Secretary Voltaire Gazmin and Enegry Secretary Carlos Jericho Petilla. The agreement was signed by PIA Administrator and Vice Chairman of the Board Leo Tereso Magno and FDC President and Managing Director Jesus Alcondo. Others in photo are: Filinvest Land Inc. (FLI) First Vice President and General Counsel Atty. Pablito Perez, FLI First Vice President Engr. Antonio Cenon, Filinvest Development Corporation (FDC) Chairman Jonathan Gotianun Villanueva, Misamis Oriental Mayor Juliette Uy, PIA Chairman of the Board B/Gen. Triunfo Agustin (Ret), PIA Corporate Secretary Atty. Raul Ragandang, and Poblacion Barangay Captain Leah Dagasuhan. (Richard Viñas)

Manila, Philippines — President Benigno S. Aquino III witnessed yesterday the contract signing of the P30-billion investment of Filinvest Development Corp. (FDC), Inc. to build power plants in Mindanao and provide 405 megawatts of coal power to the region’s grid.

The contract was signed between Phividec Industrial Authority and FDC for the establishment of the 405 megawatt circulating fluidized bed (CFB) coal-fired thermal power plant in an 84-hectare land within Phividec Industrial Estate in Villanueva, Misamis Oriental.

With the project, President Aquino said Mindanao will soon become the “Land of Promise Fulfilled.”

“These plants that Filinvest are committing to is a reaffirmation of this confidence. They are a significant part of the long-term solution. This signing gives us peace of mind that the permanent solutions are being put in place,” Aquino said. “By 2016, these three plants, by themselves, will be providing 405 megawatts of coal power to the Mindanao grid.”

“With the energy these plants will be producing by 2016, we expect production capacity to be almost 470 megawatts above peak demand,” he added.

“We are not just increasing Mindanao’s maximum capacity. Beyond that, we are reinforcing their entire energy supply with more reliable and stable sources. We are making their energy infrastructure much more competitive,” Aquino said, noting that the establishment of the power plant in Mindanao is expected to generate 2,000 jobs.

President Aquino said the development comes at a critical time when the government is working on a peace agreement with the Moro Islamic Liberation Front (MILF), noting that with the spur of economic growth in Mindanao comes more lucrative centers in the area aside from Davao and Cagayan de Oro.

President Aquino, meanwhile, said that while there is a current power crisis in Mindanao, power woes in the southern part of the country did not happen overnight as former local officials in the area relied solely on hydropower without ensuring the maintenance of hydropower plants. Illegal logging was also prevalent.

“So, when we stepped into office, we knew that we had to start working immediately. We began making the structural changes that encouraged the private sector to come in and put up power plants,” Aquino said.

He said last year, Aboitiz began a project to build two coal-fired power plants in Davao, which will provide a total of 300 megawatts, which will be finished by late 2015.

“Businessmen normally would tend to be a conservative lot. But here, they are actually placing the other sources to a commitment not in terms of a demonstrated market that is already there but rather this is really a commitment of theirs to share in building a future, which is to invest when it is not exactly clear,” Aquino said.

“Everything will materialize in the best light. So, it is a boat of confidence on their part, and this should be encouraged. And, we should help those who are actively helping to solve the problem instead of grandstanding,” he said.

The Palace had earlier said that power woes in Mindanao will ease by 2015 as power plants takes three to four years to be established.

Alcantara Group to revive diesel plant

By Iris C. Gonzales (The Philippine Star) | Updated April 18, 2013 – 12:00am

MANILA, Philippines – The Alcantara Group said it is preparing to restart the 98-megawatt Iligan Diesel power plant in Mindanao for its possible full operations by September 2013.

However, the group conceded that this would be tough given the 30-year old plant’s poor maintenance records and scarcity of available parts.

The Iligan power plant is among the facilities eyed by the Department of Energy to provide additional power in Mindanao, which is currently experiencing rotating outages because of the power supply crunch.

“It is a tough order, but we will try our best to deliver the most we can in the shortest possible time,” said Ruben Ramilo, tasked by Alcantara Group unit Mapalad Power Corp. (MPC) to supervise the rehabilitation and operation of the power plant.

At the same time Alsons Power vice president for operations Edgar Sevilles said Mapalad started rehabilitation work last month after receiving the go-signal from the Commission on Audit (COA) to take over the plant.

He said the plant is expected to begin operating on a ramp-up basis within this month with the objective of reaching its full capacity by September.

The Alcantara Group is spending P1.2 billion for the acquisition and rehabilitation of the plant.

Sevilles said the plant’s diesel generating units need overhaul but the company has been having a difficult time determining which units need major or minor repairs due to the lack of proper maintenance records.

“We’ll have to make assumptions and random inspections in order to map out plans of action for each unit and for all other auxiliary equipment and facility,” he said.

Aside from poor maintenance records, the plant also needs replacement parts and equipment, some of which are no longer available in the market.

“Some of these items are already obsolete and are no longer available in the market thus need to be completely replaced with updated models, some would take around three to four months for the suppliers to deliver these items, so we’ll have to consider this lead time in projecting our load ramp-up schedule. But as we have said, we will try our best to stay on track with our target schedules despite these difficulties,” he said.

Mapalad has already signed off almost 90 percent of its full capacity via power sales agreements (PSAs) with distribution utilities.

The Iligan plant was originally developed and operated by the Alcantara Group thru its subsidiary, Northern Mindanao Power Corp. (NMPC), under two energy conversion agreements with the National Power Corp. (NPC) through the build, operate and transfer (BOT) scheme.

The agreements expired and eventually, the Iligan City government decided to invite interested parties to bid for the ownership and operation of the power plants in 2011.

The Alcantara Group subsequently won the contract through a negotiated bid, which was subjected to a “Swiss Challenge.”

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