Napocor chief proposes new privatization scheme for Pulangi plant

November 2, 2017 By Victor V. Saulon, Sub-Editor

http://bworldonline.com/gbpc-plans-pumped-storage-hydropower-plant-visayas/

THE PULANGI hydroelectric power plant is best sold to the private sector, but the buyer should commit to build the other units of what was meant to be one of Mindanao’s biggest energy sources.

This is the proposal of Pio J. Benavidez, president and chief executive officer of National Power Corp. (Napocor), the government entity that owns the 255-megawatt (MW) hydroelectric power plant in Maramag, Bukidnon.

“Hindi niya pa sinasagot ang proposal ko (He hasn’t responded yet to my proposal),” he said, when asked whether Finance Secretary Carlos G. Dominguez III, who chairs the Napocor board, has given his consent to the plan.

In a chance interview, Mr. Benavidez said the plant may be sold ahead of the Agus hydropower complex, which the DoF wants to be rehabilitated using funds from China ahead of its eventual privatization.

He said the Pulangi plant, which has three power generating units, does not have the ownership issues that hampered previous plans to privatize the Agus complex, which Mindanaoans say produce 400 MW of dependable power out of its 772 MW installed capacity.

Both plants are required to be privatized under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), the law that restructured the energy sector.

Mr. Benavidez said he has advised Mr. Dominguez that the government sell Pulangi on the condition that the winning bidder should also commit to build the four other plants that were meant to built along the river, based on its original feasibility study.

“Ibig sabihin, magtatayo siya ng mga plant (That means, the winning bidder will build power plants),” he said.

Commissioned in December 1985, Pulangi 4 was the only one built out of several run-of-river hydroelectric power plants envisioned along one of Mindanao’s major tributaries. The Agus hydro complex, in contrast, consists of six cascading power plants from the mouth of Lake Lanao in Marawi City down to the Maria Cristina Falls in Iligan City.

He said his proposed condition for the sale of the Pulangi plant is needed because the plants to be built would use the water flowing from the same river. If one owner of a higher elevation plant blocks the water flow, owners of the lower plants would have a problem, he said.

“Sa Pulangi naman ang ire-rehab mo lang is Pulangi 4. All the rest hindi naman existing pa (In Pulangi, what needs to be rehabilitated is only Pulangi 4. All the rest are non-existent yet),” he said.

Mr. Benavidez said the capacity of the future plants would depend on the outcome of the validation on the previous feasibility study.

He added the sale could go ahead of Napocor’s four-year timeline for the Agus complex, which he said should be rehabilitated based on a schedule that upgrades the oldest of the six plants first.

“Cost per kilowatt (kW) is the basis for awarding the [Agus rehabilitation],” he said. “The lower the cost per kW wins.”

On Agus, Mr. Benavidez said what will be privatized is only the operations and maintenance. The government, through Napocor, remains the owner of the complex He noted this mode satisfies the provisions of EPIRA.

The government’s move on the Agus-Pulangi complex is the latest attempt to privatize the government’s holdover power generation assets, which should have been handed over to the private sector 10 years after EPIRA was passed.

It also answers calls from Mindanao plant operators to do the rehabilitation while power oversupply exists.

“With all the supply coming into Mindanao today, it may be time for the government to finally decide on the fate of the Agus complex. Perhaps it is time for these old power plants to be rehabilitated,” said Antonio R. Moraza, Aboitiz Power Corp. president and chief operating officer, told a forum in Davao City in July.

But others are skeptical, especially if the funding will come from China, from which the DoF previously said P54 billion will be sourced for the Agus rehabilitation.

“China is in tremendous financial distress. They have lent too much money to their state enterprises and they will have a financial crisis any time now,” said economist and professor Bernardo M. Villegas, when sought for comment.

He said the proposed funding from China for a number of local infrastructure projects are just that – pledges.

“In this country, pledges mean nothing,” he said. “These Chinese pledges will not materialize. I’d be happy if I see one-third of that flowing in. Whatever is mentioned by the Chinese I think only one-third will become reality.”