An energy solution that satisfies no one
Credit to Author: BEN KRITZ, TMT| Date: Mon, 03 Jun 2019 16:22:11 +0000
ELECTRICITY supply in the province of Masbate should not be as big a challenge as it has apparently become, but with the exception of the office of Gov. Antonio “Tony” Kho, most of the people and organizations with a stake in the issue seem to be completely incapable of managing it in a sensible way.
Masbate, which has a population of about 900,000, has a single electricity distributor, the Masbate Electric Cooperative (Maselco). Since 2007, Maselco’s energy has been supplied by DMCI Power Corp., which won the bidding for a 15-year power supply agreement specifying the construction of at least 13.0 megawatts of stable capacity; the province’s average demand is about 11.9 MW. DMCI’s bid offered construction of a 15-MW coal-fired plant, and a 12.4-MW bunker-fired generating facility.
There were problems with the Maselco-DMCI arrangement from the outset, beginning with an apparent lack of consultation on the part of the cooperative, DMCI, and the Energy Regulatory Commission (ERC) with the community. The province and several local government units objected strenuously to the construction of a coal plant, forcing DMCI to shelve that plan. In 2010, DMCI instead put up several diesel-powered facilities, which provide Masbate with a maximum of 27.9 MW of electricity: An 18.4-MW main plant located in Mobo, and four small generating units of 1.5 to 3.0 MW capacity.
In 2015, DMCI and Maselco resurrected the original plan to build a coal plant, asking the ERC to extend their PSA; the ERC provisionally approved the plan, and by late 2017 DMCI had finalized the contract for the plant’s construction. The plant, which is being built by subsidiaries of China Energy Engineering Group and China Southeast Asia Electric Power Construction Corp., is scheduled to be operational by October this year.
The idea of a coal plant, however, was no more appealing to the provincial government the second time around than it was a decade earlier, and in May 2018 the provincial board issued a resolution declaring Masbate “coal free” and banning the construction or operation of coal generating plants. The move, coming three years too late, has not stopped work on the DMCI plant, which was granted a certificate of endorsement by the Department of Energy last week. The endorsement is required by the ERC for the issuance of a certificate of compliance, which will turn the provisional authority granted in 2015 for the plant’s construction into a final approval.
The DoE even doubled down on the implied rebuke of Masbate’s delayed dissent by granting the project a “certificate of energy project of national significance” (CEPNS), which serves as a pre-approval and fast-tracks the processing of any required licenses and permits for the plant. The provincial government and local government units in Masbate could still conceivably try to block the plant from operating if they act quickly to deny the remaining permits that must be issued, but this would likely only delay its opening. The three-year-old provisional authority and subsequent approvals by the DoE would almost certainly be upheld in court.
Complicating the entire situation is the fact that it has been playing out against the backdrop of the atrocious management of Maselco. The cooperative has distinguished itself as one of the most badly run distribution utilities in the entire country. Its poorly maintained distribution grid is prone to frequent breakdowns that cause hours-long outages across the province, and its financial state is a complete mess. Things finally came to a head in June 2017, when DMCI cut power to the entire province due to at least P320 million in unpaid bills to Maselco. At that point Gov. Kho stepped in, calling on the National Electrification Administration (NEA) to take over management of the failing cooperative, and establishing his own satellite office there to personally monitor developments.
The NEA has not been much of an improvement. Power outages are still frequent, and while the governor’s intercession has convinced DMCI to keep the lights on, the company has had to invest additional money to replace line reclosers in its main distribution lines, which will help to minimize power interruptions due to breakdowns in Maselco’s grid. Meanwhile, the cooperative’s debts to DMCI are hardly being reduced; as of the end of last year, Maselco still owed an estimated P240 million to DMCI (Gov. Kho earlier said the real amount might be five times as great), and has not yet presented a clear plan for repayment.
Now, post-election enthusiasm has once again dialed up public resistance to the coal plant, which to outside observers presents a puzzling picture of the province. Simultaneous demands for an immediate end to frequent power outages, the provision of stable power supply from clean sources, and a quick fix to Maselco’s management problems seem impossible to simultaneously satisfy, yet Masbate’s extraordinarily politically engaged population has made it clear that anything less will meet with disapproval. Reality, however, does not leave many choices.
Allowing the coal plant to go ahead will at least take care of the supply problem, and will help to reduce the province’s reliance on an even worse option, diesel-powered generation. The new coal plant will also reduce power subsidies to the province by as much as P6.5 billion, funds that could conceivably be redirected to bailing out Maselco – provided, of course, that the NEA, the DoE, and the provincial government can find a way to fix the cooperative’s underlying problems by reorganizing or privatizing it. And finally, the reality of having to make the best of a bad situation should encourage public and government stakeholders to develop more sustainable long-range plans for the province’s energy needs. ben.kritz@manilatimes.net
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