Agus, Pulangi plants may be privatized ‘to Mindanaoans’

Rappler.com
Govt says auctioning off the plants is key to solving Mindanao's power supply shortage

MANILA, Philippines – The privatization of the Agus and Pulangi hydroelectric power plants as part of efforts to solve the power shortage in Mindanao is still in the cards despite opposition from several groups and restrictions under law, President Aquino said Monday, May 14.

Ang idea doon, kung ipa-privatize, i-privatize sa Mindanaoans (The idea is, if we will privatize, we will privatize to Mindanaoans),” Aquino told reporters in Davao City, where he attended an event.

Aquino has said that auctioning off the plants will allow the entry of private investors who have the money to rehabilitate them and expand Mindanao’s generating capacity.

But groups are opposing it, saying it would lead to an increase in power rates as the investors will have to recover their costs.

The government, meanwhile, has been flip-flopping on the matter due to restrictions under the Electric Power Industry Reform Act (Epira). Under Epira, a private company cannot own 30% of an area’s power generation sector. Agus and Pulangi together supply 52% of Mindanao’s energy needs.

Aquino said the plants may be sold to not just one, but several investors to comply with Epira.

‘Technicalities’

However, Aquino said privatization is not the only issue that needs to be addressed. How the new owners of the plants would “synchronize” their operations to ensure stable power supply is also vital, he said.

Maraming technicalities. Iyong unang tinalakay, kumikita ba iyong Agus at Pulangi by itself? Kung kumikita, kayang bayaran iyong mga utang nito, kayang i-maintain, kayang palakihin? (There are so many technicalities. One is income. Can this cover the debt tied to the plants, maintain the plants and expand them?)

Kapag hinati-hati ito, paano masisigurado na synchronized pa rin iyong operations nila at hindi magiging kanya-kanya na magpapasama ng sitwasyon? (If we sell them separately, how can we ensure their operations will still be sychronized?)” he said.

Aquino said these are the points they are “still studying” before they can decide on whether or not to privatize the plants.

Management

Before this, Luwalhati Antonino of the Mindanao Development Authority already said that Agus and Pulangi cannot be sold separately because they have the same water source and water rights.

Instead of selling the plants, she proposed to the President to allow Mindanaoans to manage them.

She said this would greatly improve the plants’ finances, claiming that “irregularities” at the National Power Corp. (Napocor) led to their ballooning debt.

She said the plants were actually making money, but this was eaten up by other “losing” generating plants of Napocor in Mindanao.

Privatization

All of Napocor’s power assets were supposed to be privatized under Epira to generate funds to pay down the company’s debts, which had long burdened government coffers.

Mindanao’s major power plants however were exempted for a period of 10 years to keep rates in the region from going up. The ban on selling Agus and Pulangi expired in 2010.

The privatization of at least 70% of Napocor’s assets is one of Epira’s conditions for retail open access, where end-users of electricity will have the freedom to decide which among the generating plants they’d like to directly source power from. The end goal is to bring down electricity prices in the Philippines, now the highest in Asia. – Rappler.com