The disappointment among the locals that greeted the President’s appearance at the much-ballyhooed Mindanao power summit the other week was palpable and pervasive. I don’t think any single local leader of note took it upon himself or herself to enthusiastically endorse the President’s position.
A large part of it was his reported high-handedness. By most accounts, he didn’t even bother to listen to the consensus recommendations of the summit participants. Instead he scolded them for being “spoiled” and ordered them to toe the line about which he’d already made up his mind even before coming: You’ll have to pay more for the additional electric power you need.
This unnecessarily aroused antagonism towards the already difficult sell that Aquino had to make. Among the prickly rejoinders to the President were the points made below by the energy and water-power sector committee of the Philippine Chamber of Commerce and Industry:
• The policy framework for attacking the power shortage problem in Mindanao must be the “Mindanao Plan”, a decades-old official commitment—going all the way back to the Marcos years—to give the region a competitive advantage over the rest of the country due to its chronic problems with high fuel and shipping costs, local conflicts, lack of infrastructure, and inattention by the Manila government.
• “We are not spoiled.” The citizens of Mindanao are ready to cooperate with any government program consistent with the Mindanao Plan, including “reasonable” increases in power cost.
• Existing low-cost hydro-power plants must continue to provide the baseload anchor for the region’s power needs, with fossil fuel plants providing ancillary reserves. The hydro plants must remain in government hands, although rehabilitation and maintenance of these plants (as well as the four power barges now in use) can be bid out to private operators.
• Adequate new fossil fuel plant capacity is already underway from a new 200-MW coal-fired plant being built by the Alcantara family, as well as a 300-MW expansion program of the 21 electric coops in the region.
• Do not interconnect Mindanao with the national grid, because this will just transfer the high power costs elsewhere in the country into the region. And the responsibility for crafting a competitive blended power rate for the region continues to rest with the national government. After all, no single distribution utility or major power user (“contestable account”) in the region is big enough to negotiate such a competitive rate.
These recommendations—perhaps because they were crafted by locals—are freighted with an attachment to the status quo as well as continued intervention of government. The underlying economics is shaky; for example, it’s difficult to see how the rest of the country could benefit from Mindanao’s lower power costs through interconnection when the region can’t generate enough power for itself. And frankly, the thought of a “Mindanao Plan”—like any other scheme to confer anyone or any place with unearned advantage, by fiat—leaves me cold.
By contrast, a set of recommendations from the Management Association of the Philippines is much more attuned to the free-market thinking of the day, even in the EPIRA law itself:
• It is unhealthy for Mindanao to rely so much on hydro plants (53 percent of total), given its relative lack of baseload capacity (only 37 percent, compared to 67 percent in Luzon and 76 percent in Visayas)—as well as, I would add, the vagaries of climate change that can periodically dry up those hydro plants. It would be a profitable exercise for DOE to study the optimum blend of generating capacity for the region.
• The operation of the Wholesale Electricity Spot Market should be extended into Mindanao, so that the region can benefit from additional power supply being called up elsewhere in the country through the appropriate market pricing signals. This however will require the NPC to privatize its remaining assets in the region so that the auction process is not destabilized by government’s size.
• Finally, Mindanao should be interconnected to the national grid, in order to facilitate the transfer of power across regions. The cost of this interconnection is estimated at only 17-19 centavos per kilowatt hour, surely less than the cost of Mindanao building its own additional power reserve generating capacity.
A fitting coda is provided to this controversy by the estimable Dr. Gerardo Sicat, the former National Economic and Development Authority head in the Marcos years. In his latest column, Sicat reminds us that it was the political vendetta waged by the first Aquino presidency that led to the dismantling of the Energy Department, an organizational miscalculation that reversed many of the power-related initiatives under Marcos and did away with the necessary platform for pursuing energy self-sufficiency.
The power blackouts that ushered out Tita Cory’s presidency were just a short-term consequence that set back the country’s growth by a couple of percentage points. More serious, for the long-term, was abandoning the nuclear option when the Bataan nuclear plant was mothballed. This anti-nuclear bias is one of the blinkers that effectively handicap our energy viewpoint today—the other one being a fixation on “green energy” alternatives that may be politically correct but are still immature technically or commercially (hence the need for feed-in tariff-FIT subsidies).
It’s always a difficult choice to make between doing what’s needed versus what the vociferous section of the public will cheer you for. We can only hope—despite the contrary evidence to date—that the second Aquino presidency will behave with less vindictive hindsight and more mature foresight than the first.
(Published in the Manila Standard Today newspaper on /2012/April/24) article source
No comments:
Post a Comment