October 17, 2017
THE National Transmission Corp. (TransCo) has informed the departments of Energy and Finance about its plan to borrow about P52 billion from the World Bank to fund the interconnection of the Visayas and Mindanao grids, the head of the state agency said on Monday.
Melvin A. Matibag, TransCo president and chief executive officer, said he had written a letter to the Department of Energy (DoE) asking it to endorse a plan to borrow from the multilateral lending agency.
“We are planning to borrow. We have presented our proposal,” he told reporters on the sidelines of a power competition seminar hosted by the Energy Policy and Development Program on Monday at the Bonifacio Global City in Taguig City.
He said in the letter, he also informed the department about TransCo’s plan to be the lead implementing agency of the interconnection project.
Privately-owned National Grid Corp. of the Philippines (NGCP) previously secured provisional authority from the Energy Regulatory Commission (ERC) for its plan to handle the project.
TransCo owns the country’s power transmission assets, which are being operated and maintained by NGCP under a congressional franchise.
Mr. Matibag said he had also written the Department of Finance about his plan to borrow from the World Bank. The move is meant to comply with a requirement to secure approval for borrowings of that size, he added.
He said he had discussions with the bank’s representatives, who he said were keen on financing the project at “almost zero interest” and under a term of 30 years. He said the loan would be tied with the development of renewable energy, which he said the bank has funding for.
He cited Mindanao’s dependence on power from hydroelectric plants when asked about how the interconnection project would qualify for the World Bank’s renewables funding.
The funding source is the latest floated by Mr. Matibag, who has the DoE’s support in seeking the endorsement of the Office of the President on a plan to seek congressional approval to use the Malampaya fund in financing the interconnection project. The fund is the state’s accumulated share in the revenue of the offshore Palawan gas-to-power project.
Asked whether a World Bank loan is a better option over the Malampaya fund, he said: “It can complement or it can be stand-alone.”
“If it will take time to get the Malampaya fund then maybe when we arrange the loan agreement, we can make a commitment that the payment will come from the Malampaya fund, whatever will be the terms,” he said.
On Sept. 9, 2017, ERC announced that it had granted provisional authority to NGCP to implement the project, which will enable power supply importations among the Luzon, Visayas and Mindanao grids.
The project, which will cost P51.6967 billion, covers the linking of the power grids via Cebu in the Visayas and Dipolog City in Mindanao. The converter stations in Visayas and Mindanao will be located in Sibonga, Cebu and Aurora, Zamboanga del Sur, respectively.
“The bottomline here is the cost will not be passed on the consumer,” Mr. Matibag said, adding that NGCP usually passes on to consumers the cost it incurs in funding transmission projects. — Victor V. Saulon