Monday, March 20, 2017

Mindanao power producers urged to maximize energy mix

By Danessa Rivera (The Philippine Star) | Updated March 20, 2017 - 12:00am

MANILA, Philippines -  Mindanao electric cooperatives (ECs) and distribution utilities (DUs) are urged to take advantage of the excess power supply regime in the power grid as the Mindanao Development Authority (MinDA) pushes for reliable and affordable power supply in the region.
MinDA said power distributors should maximize their energy mix and ensure affordable power for their consumers with the oversupply of energy flooding Mindanao in the next few years.
 “It is now all about achieving a balanced mix of their sources. Electric cooperatives and distribution utilities must now take advantage of the abundant supply and cheap hydro power but at the same time utilizing their coal power supply contracts,” MinDA deputy executive director Romeo Montenegro said.
 “Power distributors must balance reliability, sustainability and most importantly, affordability of power,” he said.
The Duterte administration has pushed for a “technology agnostic” approach on energy security – prioritizing affordable power no matter the technology, to sustain the country’s industrialization.
Although hydro power courtesy of the Agus-Pulangi complex remains to be the biggest and cheapest single source for power in the island, several coal power plants have come on line in the last two years and, combined, now accounts to around half of the supply.
At present, AboitizPower, San Miguel Energy, Filinvest and Saranggani Energy have completed their coal power plants and have started supplying energy into the grid. The flood of new capacity is causing an oversupply of power in Mindanao, an island that just last year suffered up to eight hours of power curtailments daily in some areas.
However, the MinDA official said the oversupply must also be balanced well as some ECs have over-contracted. He encourages electric cooperatives to properly plan their demand forecast to better manage their supply.
‘Their ultimate concern must be the welfare of their consumers. What will give consumers the reliability and what will be cheapest,” said Montenegro, who also heads the technical working group of the Mindanao Power Monitoring Committee (MPMC).
Created in 2012 through Executive Order 81, MPMC is tasked to coordinate the efforts of the national, regional, and local governments and power industry stakeholders to improve Mindanao’s power industry. 

Mining woes fail to dampen DMCI outlook

Posted on March 20, 2017

DMCI HOLDINGS, Inc. is expecting better financial results this year, although the upside remains limited to single digits while it develops new mining sites and restarts suspended operations, among others.

The listed conglomerate may achieve “a little better” profitability, its Vice-President and Chief Operating Officer Herbert M. Consunji said in a media briefing in Makati City last Thursday, after announcing flattish earnings for 2016.

DMCI Holdings reported a core net income of P12.1 billion for last year, a 1.63% decrease from the P12.3 billion booked for 2015. Taking into account one-time gains, its profit dropped 5% to P12.2 billion from 2015’s P12.8 billion.

Sharp declines in the profitability of DMCI Homes, Maynilad Water Services, Inc. and DMCI Mining Corp. offset the double-digit surge in Semirara Mining and Power Corp.’s net income.

“All the indications are at least positive this year, except for mining,” Mr. Consunji noted, as DMCI Mining Corp. swung to a net loss of P65 million from a net income of P501 million because of stalled operations, falling nickel prices and weakening demand for lower-grade nickel.

The Department of Environment and Natural Resources (DENR) suspended the operations of Berong Nickel Corp. in June 2016 because of the alleged discoloration of the hosting barangay’s river system and tributaries.

In the following month, the Environment department also ordered the suspension of Zambales Diversified Metals Corp. because of “social issues” arising from its operations.

DMCI Mining has filed a motion for reconsideration with the DENR. While waiting for the department’s action on the appeal, it will work on recommencing the operations of Berong Nickel and Zambales Diversified.

“We should still be okay because the suspension orders have yet to take effect until the OP (Office of the President) says they’re upholding the decision,” DMCI Mining President Cesar F. Simbulan, Jr. said during the same briefing.

DMCI Mining intends to rebuild its manpower first at suspended nickel mines in Zambales and Palawan within the month. Its head count has dropped from 800 workers to 58 since the DENR served the suspension orders.

Asked how soon DMCI Mining can resume work in Palawan and Zambales, Mr. Simbulan said: “As soon as we can organize our people. Definitely this month we’ll start testing the waters.”

In early February, the DENR ordered the closure of 23 metal mines and the suspension of five others, following an audit into their environmental management practices starting in July 2016. It, however, gave the concerned companies time to appeal their cases.

“You must remember we are a contractor of the government. The government loses its quasi-judicial function being a party to a contract, so we are contracting parties and you cannot just rescind our contract,” Mr. Simbulan noted.

“There is a provision in our contract on how to settle our dispute. So, we can go to arbitration, for example, but you cannot just say I don’t like it anymore and I am done.”

In the meantime, DMCI Holdings will continue banking on Semirara. The listed subsidiary accounted for 58% of the group’s earnings in 2016 after posting a record P12 billion in net income on higher coal and power sales.

DMCI Holdings has committed P56.98 billion for capital expenditures this year, allocating 42% over the P40 billion programmed for 2016 largely for the development of two mining sites near the Panian mine in Antique and the launch of more residential projects.

Of the total, the conglomerate earmarked P46.5 billion for DMCI Homes, P8.44 billion for Semirara, P1.33 billion for off-grid supplier DMCI Power Corp., P570 million for construction firm D.M. Consunji, Inc. and P100 million for DMCI Mining.

“We will spend more for Semirara because we are building up new areas. But the cost to produce will be much less because we will simply transfer the overburden in the nearby existing pits,” Mr. Consunji noted.

D.M. Consunji also looks to sustaining its contribution to the group, as it expects to recognize about P15 billion in revenues within the year. Maynilad, meanwhile, should turn in 3-4% more income in anticipation of higher billed volume.

“Technically, Maynilad should receive an automatic adjustment for forex (foreign exchange) and CPI (consumer price index) supposedly on April 1st but the MWSS (Metropolitan Waterworks and Sewerage System) asked some time to review the tariff mechanism,” Mr. Consunji said.

DMCI Holdings maintains a 25% stake in Maynilad. Last year, the water business’ contribution to the earnings of the group declined 19% because of the expiration of its income tax holiday.

The listed conglomerate also expects its other businesses -- DMCI Homes and DMCI Power -- to improve their profitability and contribution to the group this year.

DMCI Homes raked in 46% lower in 2016 because of the deferred recognition of revenues from high-rise projects, while DMCI Power steadily grew its profit on higher electricity sales in Masbate and Palawan along with the full-year operations of its 15.6 megawatt bunker-fired plant in Mindoro.

Shares in DMCI Holdings closed 18 centavos or 1.50% lower at P11.86 apiece on the Philippine Stock Exchange on Friday.

ERC grants NGCP P5.5-B capex for 2016

Published March 19, 2017, 10:00 PM by Myrna M. Velasco

Transmission firm National Grid Corporation of the Philippines (NGCP) had been provisionally granted lean capital expenditures of P5.5 billion for this year, giving focus only on highly critical projects.
The provisional 2017 CAPEX was part of the P113.4-billion capex that the company has petitioned for with the Energy Regulatory Commission (ERC), covering the stretch of four years, or until year 2020.
“NGCP’s application covered capex for calendar years 2017 to 2020 with a proposed total cost of some P113.4 billion, but the ERC only provisionally approved the capex for this year amounting to P5.5 billion,” the industry regulator has emphasized in its statement to the media.
ERC Chairman Jose Vicente B. Salazar said “the Commission needs to study further the propriety of the capex projects and their corresponding costs for the years 2018 up to 2020.”
He stressed “there is no urgency to grant approval of those projects which can be done upon completion of the public hearings,” while also emphasizing that there is a “need to establish and ensure that the projects are indeed necessary so as not to unduly burden the consumers with exorbitant power rates.”
The ERC qualified that the approval covered 58 projects, out of the 65 projects in NGCP’s list on its five-year rolling capex program.
The power industry regulator indicated that the projects already given go-signal for implementation were those found “to be urgent and crucial to ensure continuous, efficient and reliable supply of electricity.”

Solar pioneer starts 150-MW Tarlac solar farm

By Danessa Rivera (The Philippine Star) | Updated March 18, 2017 - 12:00am

CONCEPCION, Tarlac, Philippines — Solar Philippines has kicked off the construction of its 150-megawatt (MW) solar farm with battery storage here, its largest solar power project to-date, which can provide the province’s requirements in six months’ time, its top official said yesterday.
The whole solar farm will start operating as a merchant plant in the third quarter of the year, Solar Philippines president Leandro Leviste said during the ceremonial groundbreaking of the project.
“The output of the 150 MW plant that will be operating here by the second half of 2017 will be able to power the entire Tarlac province with cheap renewable energy,” he said.
The company official said this will heed Energy Secretary Alfonso Cusi’s call to put up more merchant power plants – or those generating facilities selling their output to the wholesale electricity spot market (WESM) – to further spur competition in the electricity spot market.
“What we want is to make this fast…(because) solar is now cheaper than coal and therefore get this online within 2017. And that’s why even without the contract finally approved by regulators, we’re doing this for most of the plant’s capacity,” Leviste said.
The Concepcion solar farm will comprise close to 450,000 solar panels and over 150 hectares, with room to expand as demand for solar with batteries increases.
Leviste said the cost to put up the solar farm is equivalent to $1 million per megawatt, or roughly $150 million for the entire project.
“With the battery… it can be an additional 20-50 percent of the cost of the project. But we’re not doing all the batteries all at once, it’s going to be phased incrementally,” he said.
Solar Philippines is the developer, investor, contractor and supplier for its projects – a strategy which the company believes is the key to making solar cost-competitive.
“Why do we expect lower price? One is vertical integration, by doing solar panel manufacturing in-house as well as the construction. the development, the financing will definitely lower the cost. Second is the economies of scale,” Leviste said.
Once completed, the power plant will have many firsts in its name.