I read reports saying that Mindanao is well and “ok” on power needs due to the many new power plants being put up. True? Not really!
Mark my words. In a year or so, there will be another acute power shortage in Mindanao. This will trigger a mad rush among power coops where to get power on a stop gap basis. They will be scrambling and stumbling all over the place to see where to get power while the new power plants are not yet in operation. That’s a gap window of about four to five years or so.
NOT ROSY — The rosy picture being painted today by the energy sector about sufficient generating capacities on a long term in Mindanao may be accurate but if we look closely, the challenge is how to address the situation on a short term before these new power plants start operating. Yes, there are big coal-fired plants being built but they will not give us electric power earlier than four or five years from today. In the meantime, where do we get the power that we need to sustain our incremental growth? Take note that even in today’s power situation, Mindanao is already having a power shortage or a deficit in its demand and supply data. Hence the intermittent brownouts now occurring.
COOPS UNEASY — The power coops are sitting uneasy today. For example several coops, or more than 20 of the 33 electric coops all across Mindanao had early on signed up for their power needs with Ayala’s GN Power to cover their future power need projections. Such power sales agreement in 2010 was a breakthrough when the Mindanao coops aggregated to leverage a better price deal. Well and good! But a reality check is that GN Power’s planned 540MW plant in Kauswagan, Lanao del Norte has just started breaking ground. The coops are now becoming restless, knowing that the original targeted start of operations in 2018 or two (3) years from now as earlier projected, is too tight given its current accomplishment which, based on latest DOE report, was less than 20 percent and still at earthwork stage. Several of these coops are no longer pinning totally their hopes solely on their supply contracts with GN Coal Power. In fact, several of them have started reducing, withdrawing or reconsidering and looking for power somewhere else. Why? Simply because the contracted power they are expecting within the next three years or so will NOT be available by then. Besides GN Power, the consuming public needed to be apprised of status of other ongoing big-ticket coal-fired power plants such as Filinvest 405MW inMisamis Oriental, Alsons Coal 200MW in Sarangani, 600MW San Miguel in Malita, Davao del Sur and the still to be constructed San Ramon 100MW in Zamboanga.
REALITY CHECK — Their reality check is coming from the lessons of Aboitiz-owned new 300 MW Thermal South Inc. now completed in the outskirts of Davao City. Although the construction is completed, it is not yet giving us power up now. Although the Therma South Unit 2 with 150MW is expected to come online this month, the other Unit 1 with 150MW was pushed back for about 10 months due to some technical glitches not of its own making. The famous “EasterSundayBlackout”that darkened almost the whole of Mindanao caused by a rotting machine part falling and throwing a virtual monkey wrench that stopped the power transmissions was totally unexpected. Therma South Unit 1 is still behind schedule. (And still counting.) Hence, the speculation that within 3 or 4 years there may be a power gap that must be bridged , is now a reality. This is why a mad scramble among the coops where to get power during the interim is my projection into the near term.
STOP GAP — This brings us now to a situation where power coops will have to scout around for temporary arrangements to bridge this power gap. The way forward is to install small to medium power generating capacities that are embedded or exclusively intended for specific coops for their own localities, like diesel or bunker fired modular generators. They may be a bit expensive in terms of consumer price. But past experience taught us that it’s far better to have a bit more reasonably expensive power than having “no power” at all! There are other options like installation of solar powered or small hydro or biomass plants. Whatever the option is, there must be ways done to insulate and protect communities from a serious deficit in the whole grid — an eventuality that now appears inevitable.
DASURECO — I am a native of Davao del Sur so I am proud to cite my province as an example of this forward looking remedial and preemptive measure. Look at what the Davao Del Sur Electric Cooperative, Inc. (DASURECO) in Digos, Davao del Sur has done. It installed early last year modular gensets with a 15MW standby capacity in partnership with Alson’s Mapalad Power Company. General Manager Godofredo Guya and his board of directors took the right , decisive steps. I understand DASURECO reduced its contracted supply contract which it earlier signed with GN Power.
BALUT ISLAND — Here’s another example of the same power coop’s strategic move. Last week, DASURECO paved the way for the putting up of a small embedded power plant in Balut Island by signing a “waiver agreement” with PowerSource Phil. Inc., Being four ( 4 ) hours away from General Santos City by boat and not connected to the Mindanao power grid, the planned new power capacity will boost the island economy which serves as our frontier with neighboring Indonesia. The island is not easily accessible but a hidden jewel at the southern tip with a forward-looking chief executive, Mayor Virgie Cawa in tandem with husband, Vice Mayor Gerry Cawa. It is one of the towns of the Municipality of Sarangani (not to be mixed up with Province of Sarangani in South Cotabato. ) Balut is now part of the newly created province of Davao Occidental, carved out of Davao del Sur, but still within DASURECO’s franchise area. Am I glad PowerSource Phils, Inc. agreed to take care of power generation, operation and distribution in Balut Island. This is part of my own personal Mindanao advocacy in the private sector.
CHEAP NO MORE — Soon, Mindanao will no longer enjoy its comparative advantage over Luzon and Visayas . The regime of low “blended price“, which is a mix of cheap hydro and fossil (coal, bunker, diesel) power is about to come to an end. This is inevitable with the privatization of power generation mandated by the EPIRA law. Hydropower ( from Agus river and Lake Lanao ) will no longer be a key player that will give a price blend that will keep cost of power cheap, especially when government starts transitioning to a regime where the private sector will have to step into its shoes as mandated by the EPIRA law.
DELAYS — One critical area that also needs radical reforms is the unmitigated and unreasonable delay in getting permits and approvals . Private investors had been complaining about unnecessary and institutional delays that contribute to the mess the power sector is now facing.
FUTURE — One important final point. There are still sticky issues about Mindanao power generation in relation to the prospective emergence of the Bangsamoro governance as a consequence of the peace agreement with the Moro Islamic Liberation Front (MILF), given that Lake Lanao, the main source of hydro power in the island region is within the territory. We need to resolve these issues with clarity.