Cebu guv plans to form body to handle power concerns

Sunstar Cebu

CEBU CITY -- To help Cebu’s residents understand and think of solutions to the power situation, Gov. Gwendolyn Garcia proposed Friday the creation of a power task force that will meet regularly, “brownouts or no brownouts.”

She said she will draft an executive order that will create the group and encourage more proactive action on problems like power shortages.

Included in the team will be the Department of Energy (DOE), National Grid Corp. of the Philippines (NGCP), Cebu Energy Development Corp. (CEDC), Korean Electric Power Corp. (Kepco), all other power generators, and distributors like the Visayan Electric Power Corp. (Veco) and electric cooperatives.

Garcia said she came up with the idea after realizing that nobody is tasked, at present, to oversee the situation in Cebu.

Coordination

CEDC president Jesus N. Alcordo agreed with the idea, raising the need to evaluate the power supply situation consistently.

“This should result to a better coordination. I think the idea of meeting regularly is good,” Alcordo said.

“What we need is the synchronization of our actions and the coordination of our plans,” Garcia said. “It is about time that we do this. Every time there is a brownout, the media would ask me if I will call a meeting.”

With power supply from Luzon unavailable, rotational brownouts are expected to continue this weekend.

“We’ve been having rotation outages of two hours since this morning due to at least 200 megawatts (mw) power supply shortage from the grid,” said Veco spokesperson Ethel Natera.

The High-Voltage Direct Current or Luzon-Visayas link has been scheduled for maintenance from 4 a.m. of Oct. 27 to 5 p.m. tomorrow, Oct. 31.

The affected areas Friday were parts of Naga City; B. Rodriguez Ave., J. Llorente St. and Fuente Osmeña Circle in Cebu City; and Barangays Ibabao, Guizo and Mantuyong in Mandaue City, as well as the Mandaue Public Market.

Interruptible Load customers or commercial establishments that use their own generators like Ayala Center Cebu and Country Mall, took some of the pressure off Veco.

“By Monday, we expect that there will be an improvement (in our power supply),” Natera said. “We expect that by Sunday there will be less power consumption, as the people will be going home to the provinces.”

At the meeting with the governor, the NGCP confirmed the power deficit, but assured there will be additional power for the grid before the end of the month.

As to the creation of the task force, Provincial Attorney Marino Martinquilla said under the Local Government Code, the governor is authorized to address general welfare, and that includes the authority to convene such a group.

“It is time that we recognize our responsibilities here in seeing to it that we give as much importance to the power situation as we do with other operations in the province,” Garcia said.

This body will meet at least twice a month. (BAP/RRF/Sun.Star Cebu)

Published in the Sun.Star Cebu newspaper on October 30, 2010.

DENR to require mining firms to reforest denuded minesites

By Marianne v. go (The Philippine Star) Updated October 30, 2010 12:00 AM

Nagoya, Japan – Environment and Natural Resources Secretary Ramon Paje said he plans to require mining firms operating in the Philippines to engage in the reforestation of denuded or degraded forest areas.
As part of the country’s biodiversity efforts, Paje told The STAR that he plans to impose a new requirement on mining firms that would require them to reforest 100 hectares for every one hectare of land they destroy or excavate in the course of their mining operations.
The new requirement would particularly target mining firms that engage in open pit mining, he stressed.
Furthermore, Paje said he also wants to require mining firms to immediately restore and replant areas that they have already finished excavating as they move on to other development sites.
However, if mining firms cannot do the reforestation in their immediate area, they could do the reforestation in other areas provided they comply with the 100:1 hectare ratio.
 Paje said imposing such a requirement would help in the government’s reforestation effort, and stressed that the reforestation effort should not be a mere “tree planting” but a long-term effort at “tree growing.”
Paje, who attended the high-level segment of the 10th meeting of the Conference of the Parties (COP 10) to the Convention on Biodiversity here, agreed on the need to undertake more measures to address ecosystem destruction and losses. A healthy forest ecosystem is crucial in mitigating the effects of climate change.
The United Nations has pointed out that deforestation and forest degradation – through agricultural expansion, conversion to pastureland, infrastructure development, destructive logging and fires – account for 20 percent of global gas emissions, more than the entire global transportation sector and second only to the energy sector.

Thus as part of global efforts to mitigate climate change, programs such as the Reducing Emissions from Deforestation and Forest Degration (REDD) and REDD + would encourage countries to protect their forest ecosystem and refrain from its further destruction.
Unfortunately, certain provisions of the REDD+ program are deemed controversial by the Philippines because it would basically tie the hands of the country in harvesting the forest for some needed resources.
Likewise, the Philippines is also wary over moves to link the REDD + program to the Clean Development Mechanism (CDM) under the Kyoto Protocol on Climate Change.
Under the proposed linkage, donors or private firms that provide funding assistance for reforestation programs could apply for the so-called carbon credits.
Carbon credits are used by countries or firms that are not able to meet the required emission reduction targets imposed under the Kyoto Protocol set under the United Nations Framework Convention on Climate Change.
A profitable carbon trading market has arisen as a result.
Thus, while developing countries get funding to undertake carbon mitigating project, the carbon credits from the project accrues to the donor or private firm.

WB to help developing countries in natural wealth accounting

By Marianne v. Go (The Philippine Star) Updated October 30, 2010 12:00 AM

Nagoya, Japan – The World Bank announced yesterday a new global partnership that would give developing countries the tools they need to integrate the economic benefits that ecosystems such as forests, wetlands and coral reefs provide into national accounting systems.
The goal is to introduce the practice of ecosystem valuation into national accounts at scale so that better management of natural environments becomes “business as usual.”
World Bank Group president Robert B. Zoellick, in a press conference here, said the alarming loss of biological diversity around the world could be partly attributed to the lack of proper value placed on ecosystems and the services they provide.
Zoelick said the new partnership would provide the “missing information” on a country’s “natural capital” to guide leaders in decision-making.
The Philippines, Zoelick told The STAR, is one of the countries the World Bank is hoping to partner with in adopting a natural wealth accounting system.
“The natural wealth of nations should be a capital asset valued in combination with its financial capital, manufactured capital and human capital,” he said.
“National accounts need to reflect the vital carbon storage services that forests provide and the coastal protection values that come from coral reefs and mangroves.”
“Through this new partnership, we plan to pilot ways to integrate ecosystem valuation into national accounts and then scale up what works to countries around the world,” he added.

According to a forthcoming World Bank publication, the economic value of farmland, forests, minerals and energy worldwide exceeds $44 trillion, with $29 trillion of that in developing countries. This value is primarily commercial, as other value lies in the services ecosystems such as forests provide, including hydrology regulation, soil retention, and pollination — as a home to bees and other insects.
The World Bank chief further explained that cutting down a forest for its timber may have negative consequences for other sectors of the economy, such as loss of agricultural productivity, loss of capacity for hydroelectric power, and loss of water quality.
Putting a value to a country’s natural assets would help developing countries like the Philippines come up with “better and informed policy” and would, hopefully, also lead to a “more informed public debate” on investments and biodiversity concerns, Zoelick said.
Replying to Rhe STAR’s question on mining investment concerns, Zoelick adopting a natural wealth accounting would, in fact, make it easier to determine the cost of losses to the ecosystem and ecosystem services.
“It will help project the potential cost and potential gain from such investment,” Zoelick replied.
The new partnership takes the global agency’s work to the next level, developing the systems needed to bring the value of natural capital to the highest level of a country’s economic decision-making.
By demonstrating ecosystem accounting at scale for a critical mass of countries, the World Bank envisions that the approach will eventually be adopted by many countries.
Valuing ecosystems in this way would change the calculation that a country would make, for example, in clearing mangroves for shrimp farming, Zoelick said.
The calculation would no longer simply be the revenue from profit on shrimp farming minus the farming costs.
The loss to the economy of coastal protection from cyclones and the loss of fish and other products provided by mangroves would also be factored in.
The partnership would include developed and developing countries, international organizations and conservation and development non-governmental organizations as well as the global organization for legislators.
The first phase of a partnership to “green” national accounts includes Colombia and India, where feasibility studies to identify priority ecosystems will start soon.
Other countries in Africa, Asia, Latin America and Central Europe have indicated strong interest in being pilot countries under the partnership.

Aussie firm raises funds for RP drilling plan

By Amy R. Remo
Philippine Daily Inquirer
First Posted 21:51:00 10/29/2010

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MANILA, Philippines—Australian firm Nido Petroleum Ltd. has raised A$19.88 million to help fund the planned drilling of two exploration wells at the oil- and gas-rich Gindara and Aboabo prospects in offshore Palawan.
In a regulatory filing, Nido Petroleum said it successfully completed the placement of 159 million ordinary fully paid shares to investors at A$0.125 each to raise the amount. Merrill Lynch International (Australia) Ltd. and Patersons Securities Ltd. acted as joint lead managers for the placement.
“Proceeds from the placement are intended to be used to secure Nido’s future exploration program, including the drilling of the Gindara and Aboabo prospects, for general working capital and partial debt reduction,” the company explained.
The drilling of an exploration well at the Gindara prospect, which was estimated to contain as much as a billion barrels of oil, is expected to cost up to $24 million. Nido Petroleum targets to start the drilling between March and May 2011.
Covered by Service Contract 54B, the Gindara prospect alone is deemed to be comparable in scale to the nearby Malampaya field, which is operated by Shell Philippines Exploration BV.

PSALM mulls pulling out universal charge petitions with ERC

By Donnabelle L. Gatdula (The Philippine Star) Updated October 29, 2010 12:00 AM

MANILA, Philippines – The Power Sector Assets and Liabilities Management Corp. (PSALM) is mulling the possibility of pulling out its universal charge (UC) petitions with the Energy Regulatory Commission (ERC).
PSALM president and CEO Emmanuel Ledesma told a press conference yesterday that they are currently reviewing the privatization proceeds of the National Power Corp. (Napocor).
Ledesma said they would consider withdrawing the UC applications which seeks to increase electricity rates by nine to 50 centavos per kilowatthour (kwh) in the next 20 years, depending on the outcome of their reassessment of the proceeds from the sale of Napocor assets.
But the PSALM chief is quick to point out that they would need to study first the repercussions of the withdrawal of the rate hike petitions.
“It’s one of our options. We have to clarify first, what are the repercussions of withdrawing? We have to make sure that we’re going to be able to re-file again,” he said.
He explained that with the new administration, they would want to ensure the welfare of the consumers.
He said they would want to make sure that the applications are consistent with the provisions of the Electric Power Industry Reform Act (EPIRA) or Republic Act 9136.
“It’s in the EPIRA, the mandate for PSALM is in the law. After we privatize the assets and the independent power producer (IPP) contracts, obviously we pay off the debts. Now whatever is remaining, how is that going to be paid for? The EPIRA says that there is this universal charge that would be passed on to the consumers,” he said.

Under the EPIRA, PSALM is mandated to privatize Napocor’s power plants and IPP contracts. The latter are the power firm’s contracted capacities with third-party power generators.
The EPIRA also states that government may collect Napocor’s outstanding contract costs and debts that would not be covered by the privatization proceeds from consumers through the universal charge component of electricity bills.
Based on PSALM’s the application, it would need to recover P470.8 billion worth of stranded debts and P22-billion stranded contract costs of the Napocor.
PSALM submitted two options to recover the P471-billion stranded debts: by charging electricity consumers 30 centavos per kwh for 17 years or 22.5 centavos per kwh for 25 years.
For the stranded contract cost, PSALM proposes three options: 50.24 centavos per kwh for a one-year recovery period; 16.04 centavos for a three-year period; or 9.20 centavos per kwh for a five-year period.
Earlier, PSALM reiterated that the proceeds from the privatization of the power assets of the Napocor were used to settle the financial obligations of the state power firm as clearly stipulated in the provisions of the EPIRA.

No deadline on BG deal, says First Gen

By Donnabelle L. Gatdula (The Philippine Star) Updated October 29, 2010 12:00 AM Comments (0)

MANILA, Philippines – The Lopez Group said yesterday that it is not bound by a purported 60-day period to exercise its right of first refusal (ROFR) or any of its rights for that matter under the joint ventures with BG Energy Holdings.
In a statement, First Gen Corp. and its holding company First Philippine Holdings Corp. said they are not being subjected to a deadline with regard to the BG deal.
First Gen president Giles B. Puno said there is no truth to earlier reports that First Gen has until Nov. 29 this year to invoke a right of first refusal in the planned sale of BG Energy Holdings’ 40-percent equity in the First Gas assets to Korea Electric Power Corp. 
Puno said the right of first refusal provisions of the joint venture agreements with BG do not apply to BG’s proposed transaction and that the consent of FPHC, party to the joint venture agreement with BG, is required to complete the sale.
The First Gen chief explained that BG’s earlier disclosures to the [LSE and the NYSE] confirm that completion of the transaction is “subject to obtaining the necessary waivers and consents from First Philippine Holdings Corp.”
As such, First Gen and FPHC accordingly are not bound by any purported 60-day period to exercise its ROFR or any of its rights for that matter under the JVs with BG. 
Puno reiterated earlier statements made by First Gen that FPHC is evaluating all options available to it in respect of the proposed BG divestment, including whether or not to issue the requested waivers and consents or to acquire the BG stake itself based on pricing and terms mutually acceptable among the parties.
It will be recalled that Korea Electric Power Corp. (Kepco) has bought 40-percent stake of BG Group’s in the natural gas power plants of First Gen of the Lopezes for $400 million.

First Gen reiterated that it has yet to approve the entry of Kepco in the 1,500- megawatt (MW) Sta. Rita and San Lorenzo power plant projects.
First Philippine Holdings Corp. (FPHC) and First Gen own the remaining 60 percent stake in the gas power plants.
The Lopez power firms said they were informed that the $400-million net consideration offered by Kepco is “subject to standard completion adjustments, including interest to be paid to BG Group upon closing which is expected in the first quarter.”
“First Philippine Holdings and First Gen are evaluating their rights and options in respect to BG’s contemplated divestment of its interests in Sta. Rita and San Lorenzo,” the companies said.
Earlier, First Gen said it may not be able to join forces with Kepco as this may result in some legal issues.

Businessmen urge action, say ‘honeymoon’ over

Business World Online

Posted on 10:51 PM, October 28, 2010

BY JESSICA ANNE D. HERMOSA, Senior Reporter

DECLARING the honeymoon period over, business leaders from seven key sectors yesterday pressed the Aquino administration on reforms to ensure that rosy outlooks for the year will be sustained in the long run.

Most industries are primed to end 2010 with growth due to a global pickup but bottlenecks caused by the strengthening peso, dwindling productivity, a dearth in infrastructure and unclear government policies need to be addressed, speakers told a conference hosted by the American and European chambers of commerce.

The event was held ahead of the Joint Foreign Chambers’ submission to Malacañang next month of a 400-page roadmap hinged on so-called "seven big winners": agribusiness, business process outsourcing (BPO), power, transport infrastructure, manufacturing, mining and tourism.

The speakers were generally upbeat on 2010 prospects for areas ranging from agriculture and mineral exports, tourism arrivals and new BPO jobs.

Roberto C. Amores, the Philippine Chamber of Commerce and Industry’s vice-president for agriculture, noted that food exports picked up in August while Chamber of Mines President Benjamin Philip G. Romualdez remarked on the 36% growth of his industry in the first half.

"And more investments are flowing in. More projects are coming on stream ahead of schedule," Mr. Romualdez claimed.

The tourism sector, meanwhile, expects 10% growth in arrivals this year to 3.7 million despite a botched hostage rescue last August that led to the deaths of eight Hong Kong nationals, former Philippine Travel Agencies Association President Jose C. Clemente III said.

Oscar R. Sañez, Business Process Outsourcing Association of the Philippines chief executive, reiterated that his sector was poised to create some 500,00 jobs this year over the 440,000 generated in 2009.

But these gains will not be sustained unless the government addresses long-standing concerns, the businessmen said.

"We need more than 1,000 kilometers of toll roads just like Thailand," Metro Pacific Tollways Corp. President Ramoncito S. Fernandez said, noting that the Philippines has only 300 kilometers in comparison.

"If we can double this in five years, that’s a noble achievement already," Mr. Fernandez said, adding that the government needs to "fast track the right of way process."

The government must also promote retail competition in the power market and make the environment for long-term power purchase deals more attractive as these two thrusts could lower electricity prices, said Daniel E. Chalmers, GN Power Ltd. Co. chairman.

Some called for increasing pressure on trade partners that undervalue their currencies at the cost of the Philippine economy and also better forecasting to help firms here cope with the strengthening peso.

"I would encourage Filipinos to voice concern over controlled currencies in the region," American Chamber of Commerce of the Philippines Senior Adviser John D. Forbes said.

Speakers went on to call for increased state spending for agriculture infrastructure, a roadmap to develop manufacturing, and a fresh marketing campaign to lure tourists.

Consistency between national and local government policies for mining is likewise needed, Mr. Romualdez said.

Mediation board to settle power firm's labor woes

Sunstar Cebu

CEBU CITY -- The National Conciliation and Mediation Board (NCMB) in Central Visayas scheduled a mediation conference on November 3 to settle the labor dispute between the Visayan Electric Company (Veco) and the Veco Employees Union to prevent power outages.

Apparently, if the strike pushes through, the union will see to it that Veco’s entire operation is paralyzed.

“I ask all power consumers to bear with us because we will cut off power supply everywhere within the Veco franchise area, once the strike starts,” said Casmiro Mahilum, union president.

The strike will have the backing of the Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP), its mother union.

NCMB-Central Visayas Director Edmundo Mirasol Jr. said they are trying their best to prevent one.

“We plan to conduct a marathon negotiation with both union and management to effect immediate solution of the case,” Mirasol said.

‘Unlawful’ dismissal

According to the statement signed by Josefina Cabatingan Lim, ALU director on education and information, the notice of strike was filed on the grounds that management committed unfair labor practice with the “unlawful” dismissal of Mahilum that stemmed from a labor day activity last year.

Although it was a collective union activity, Lim said, Mahilum was singled out.

“ALU-TUCP expressed disgust over management’s decision to terminate the (service) of the local president (Mahilum) and is expressing full support of whatever the general membership will decide related to this act from management of disrespecting trade union rights,” read Lim’s statement.

Aside from Mahilum’s dismissal, the union said disciplinary cases against its members are part of union-busting.

Confirmation

When sought for comment, Ethel Natera, Veco corporate communications manager, confirmed Mahilum was fired Thursday.

Natera said the notice to strike came after.

“It is unfortunate the union leadership has chosen to endanger the livelihood of its members, who is sworn to protect and has completely disregarded its responsibility to public service as employees of a public utility all in the name of questioning management prerogative,” said Natera.

Natera said Veco assures the public that in the event of a strike, service to all areas of their franchise will continue uninterrupted.

“Customer requests, applications and payments, as well as complaints, will be acted on in a manner that the Veco customer requires and deserves. Once more, Veco service will continue as before and in no way will you, the customer, suffer for these unfortunate actions,” she said. (EOB of Sun.Star Cebu)

Published in the Sun.Star Cebu newspaper on October 29, 2010.

Power agency eyes $2B from bond issuance

PSALM also hopes to securitize Transco receivables

By Amy R. Remo
Philippine Daily Inquirer
First Posted 22:18:00 10/28/2010

Filed Under: Energy & Resources, Economy and Business and Finance, bonds and t-bills

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STATE-RUN Power Sector Assets and Liabilities Management Corp. hopes to raise as much as $2 billion in the first quarter next year through the issuance of peso-denominated bonds.
Proceeds of the bond issue will be used to settle maturing debts of another government agency, the cash-strapped National Power Corp.
The $2 billion would be double what PSALM had initially sought to raise.
“Based on our review, we feel that onshore peso would be a better alternative. But we’re still open [to other options, such as a bond sale in offshore market]. This is just the direction we’re leaning toward. But definitely, the issuance of dollar bonds is out of the question,” said PSALM president Emmanuel R. Ledesma Jr.
The company’s present liability management program allows it to either tap the local capital market or engage in dollar financing to settle obligations. Tapping the credit market has become more attractive since the government has begun slowing down the privatization of the state’s remaining energy assets.
Depending on market conditions at the time of issuance, Ledesma said PSALM could conduct the issuance either in a single transaction or by tranches.
Proceeds from the fund-raising will be used to service Napocor’s 2011 obligations amounting to $1.2 billion. In March 2011, $200 million worth of previously issued bonds would mature. In August that same year, $400 million worth of floating-rate notes would fall due, Ledesma said.
As of end-2009, Napocor’s total liabilities stood at a staggering $16.5 billion.
PSALM, which was created in 2001, has been tasked not only to handle the privatization of Napocor’s generation assets and contracted capacities, but to also clean up the power firm’s debt running into billions of dollars.
Under its liability management program, PSALM is also looking at “securitizing” close to $3 billion worth of receivables of National Transmission Corp. (Transco), according to Ledesma.
The agency is also considering “an outright sale” that may roughly amount to $3 billion.
“It’s still very early to tell. But we’re looking now more at an outright sale. It’s simpler and it’s more achievable for PSALM. But again, we’re looking at the full amount. If we could do the full amount, it would be good. If we can take close to $3 billion off our books, it will make our life a lot easier going forward,” Ledesma added.