LANAO DEL NORTE, Philippines – Aside from encouraging private sector investments in renewable energy, the Philippines should also reform its power distribution system to rationalize demand and supply, according to energy sector leaders in Mindanao.

Mindanao Development Agency (MinDA) development management officer Raymond Peter Esperat at a press forum on December 5 said the country needs to protect itself from the fallout in international events, like the Ukraine-Russia war.

But Rolando Lina-ac, vice president for operation of Iligan Light and Power Incorporated, stressed the urgent need to overhaul and allow the distribution of Mindanao’s “excess power supply” to resolve undersupply issues in other areas of the southern Philippines island and the Visayas.

Even more important, he said, is ensuring that areas hosting power generation projects receive improved preferential allocation from the Power Sector Assets and Liabilities Management (PSALM).

Lina-ac said 24 electric power distributors propose that PSALM takes on the role of consolidator and aggregator and, at the same time, re-marketer of their excess supply.

The proposal would help ease the power shortage in some Visayan islands, while also improving the bottomline of companies in their group. This would then lead to better loan servicing and lower energy costs in service communities, he added.

“If the electricity in the city is sufficiently cheap, it will attract more investors, create more jobs and help develop the economy,” Reggie Punongbayan, president of the Iligan Bay Chamber of Commerce and Industry, said.

Lina-ac, meanwhile, urged that Iligan, host of generation facilities of the National Power Corporation, should be given preferential treatment. The Agus V, VI and VII hydroelectric plants are located in the city.

Lina-ac said in the old system, PSALM contracted with all power suppliers and there was only one rate for the generation and transmission in Mindanao.

The ability to distribute excess supply to other areas would improve the power situation in communities, he said. 

“As of now there is a shortage in the Visayas, there is too much here and there, so if they are sold, components will be removed from our bill,” Lina-ac added.

Debt headaches

PSALM was created by Republic Act No. 9136 or  the Electric Power Industry Reform Act (EPIRA) of 2001 to take over the ownership of all existing generation assets of the National Power Corporation (NPC), independent power producer (IPP) contracts, real estate, and all other disposable assets, including its transmission business.

It also assumed all outstanding obligations of the NPC and was given the power to manage the orderly sale and privatization of these assets to liquidate the government corporation’s financial obligations.

In July, the Department of Finance announced moves to cement an arrangement with PSALM and NPC for the P16.71-billion worth of rehabilitation projects in the aging Agus-Pulangi Hydropower Plant Complex in Mindanao, which covers seven hydropower plants, with six on the 36.5-kilometer Agus river system that starts from Lake Lanao and ends in Iligan Bay and one in Bukidnon’s Pulangi River in Bukidnon

Many of Mindanao’s power distributors are struggling and hardly in a position to modernize their networks.

In August, Lanao del Norte leaders called on Congress to remove three towns from the franchise of the debt-ridden Lanao del Sur Rural Electric Cooperative (Lasureco), and allow them to be served by another local power distributor.

The move, if approved by Congress, would avert a looming power crisis that could affect a population of 223,958 in parts of Lanao del Norte, as a result of Lasureco’s mounting debts, estimated at P13 billion.

In June, last-minute negotiations saved Maguindanao’s power consumers in 36 towns the nightmare of having their power supply cut off due to the Maguindanao Electric Cooperative’s (Magelco) failure to settle bills that ballooned to nearly P3 billion.

In October, PSALM representatives said in a Senate hearing that the two power firms have still refused to pay their arrears. – Rappler.com