In support of Duterte's 'build' mantra, Philippines needs more power plants

In support of Duterte's 'build' mantra, Philippines needs more power plants

The crises at the moment are the disturbing yellow alerts in the power
supply of the Luzon Grid due to the onset of the summer months. Disturbing
because the situation means we are in danger of experiencing power outages
due to the fact that a number of large power plants have conked out at the
same time.

The unplanned brown-outs are ostensibly due to thinning power capacity and
the expected surge demand for electricity as temperatures soar from
mid-to-high 30's.

The recent spate of earthquakes that shook several towns in Batangas also
contributed to the unscheduled power interruptions as several power plants
situated in the province were critically damaged.

Brown-outs harm the economy by interrupting business activity. The shortage
of electricity supply also leads to structurally high electricity prices.
The high cost of electricity is a deterrent to foreign investments, and
poses a problem to businesses that are already invested in the country.

Priming up the economy

To entice more local and foreign investments, and further push gross
domestic product growth, President Rodrigo Duterte's economic team earlier
this year announced the government's plan to spend as much as P8 trillion on
infrastructure over the medium term.

Recently, the government formalized the plan by branding the program as
"Dutertenomics" aimed at constructing modern bridges and roads, mega subway
systems, and world-class airports and seaports, adopting the "build, build,
and build" mantra.

The aim is to complete these projects within the term of Duterte. However,
the "elementary" part of the program - as Dr. Watson would say - in order to
"build, build, and build," you need to have "power, power, power."

More plants needed

The concerted efforts of the government and private sector to reduce the
impact of unplanned power issues on consumers and businesses is commendable.

With the recent unscheduled brown-outs due to earthquakes and breakdown of
several power plants, coupled with the grand economic plan of the current
administration to construct large infrastructure, the Philippines needs more
modern, environmentally friendly baseload power plants.

But these are not being built fast enough.

For example, the privatization of state-owned power plants under the
Electric Power Industry Reform Act (EPIRA) is hobbled by the tedious
documentation of government-owned land on which the plants were built.

A number of crucial coal-fired power plant projects have been met with
lawsuits slapped on them by environmentalists. These have severely crippled
completion timelines.

Delays in the approval process do not only cause setbacks in the development
of these power projects - which takes not only about three to four years to
build - but also pose a threat on energy security, and most importantly
constitute a drag on the nation's economic growth.

As the government plans to construct key infrastructures under the
"Dutertenomics" program to further improve public service, particularly
transportation - either by land, air, and sea - there is dire need to build
more power plants to ensure we have enough power supply to run and operate
these projects.

Streamlining application process to build power plants

Sen. Sherwin Gatchalian, chairman of the Senate Committees on Energy and
Economic Affairs, recognizes that the problem which stymies the country's
economic development is the low power capacity of the Philippines in
general, and some big islands, in particular.

During his first committee hearing looking into "institutionalizing energy
projects as Projects of National Significance," he noted that there are many
big committed and indicative power plants lining up for investment, but they
often face challenges in securing the necessary permits and licenses.

One of the papers he received complained that regulatory permit approval in
Philippine electricity generation showed that on average, "power plant
operators need to secure 162 clearances and 102 permits."

Gatchalian is currently looking into crafting a bill which will prioritize
these big power plants (P3.5 billios or higher in capitalization) for faster
approval process.

Gatchalian is also studying a proposal that would give agencies 30 days to
check documents submitted; if they fail to act on time, it is deemed that
the papers are approved and permits are automatically granted.

Adding to the long and tedious process of securing a permit, the current
situation at the Energy Regulatory Commission (ERC) and the internal
problems it has, as reported in the papers, within the regulatory body is
causing delays in the approval of agreements between electric cooperatives
and power suppliers. A relative in the electric coop industry during my
recent visit to our province expressed alarm over this. He said in the
dialect, "Damo pa nga brownout an maabot sa aton kun dire dadali-on an
pag-aprobar! (We may have more blackouts, mano, if these are not approved in
time.)"

Gatchalian is also asking the National Grid Corporation of the Philippines
(NGCP) to explain the alleged unnecessary delays in acting on applications
for the construction of new power plants.

He is asking the NGCP to explain the setbacks in the approval process,
noting the extended time it has taken the agency to conduct a grid impact
study (GIS) - a prerequisite for power firms to proceed with the
construction of their power projects.

Stalling power plant developments is anti-poor because it jeopardizes the
country's future supply. The absence of a stable power supply is more
expensive for the ordinary Filipinos.

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Link to Original Article:
http://news.mb.com.ph/2017/04/27/in-support-of-dutertes-build-mantra-ph-need
s-more-power-plants/

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com