P774-B Energy Investments Until 2016

Manila Bulletin
By Myrna M. Velasco
February 13, 2013, 5:54pm

To underpin forecast economic growth until the end of President Aquino’s term in 2016, the scale of capital that must flow for energy infrastructure must reach P774 billion, but the bigger problem is cornering the “real serious” investments.

Based on the presentation made by Energy Secretary Carlos Jericho Petilla at the Economic Briefing, the investments needed for 2013 shall reach P53.285 billion and this will climb significantly to P280.733 billion by 2014.

The 2015 required capital flow will also be hefty at P257.820 billion; and an additional P182.098 billion shall be cornered by 2016.

However, it is evident in the Department of Energy’s presented scenario that investments in the power sector remained dismal until this point, with most of the proposed projects still at “indicative status”. The power capacities coming on line this 2013 will be 737.7MW for Luzon; 8.0MW in Visayas; and 38MW for Mindanao.

To be labeled as “indicative” would mean that the project’s implementation is still not firmed up and can still be shelved given some ‘difficult-to-resolve’ intervening factors.

The energy investment blueprint appears teeming with projects, but the DOE is not qualifying which ones are really committed to build.

Policies are also being laid down, such as the energy chief’s assurance on the net metering rules being in place in the next 2 to 3 years. However, with skidding timeframes and policy flip-flops, energy investors are no longer taking government pronouncements at face value.

While there are a lot of power investors with some degree of seriousness when it comes to investing, policy and permitting hurdles have been preventing them from moving their planned facilities into construction.

Several business groups are already sounding off worries about possibility of supply shortages, even in the Luzon grid, if the government will not work hard enough in addressing issues hobbling power investments.

The other dilemma raised by investors is on rising power costs, but Petilla is pinning his hopes that the much-anticipated foray of retail competition and open access (RCOA) will help address that.

“The government thru RCOA is coming up with a system consistent with EPIRA (Electric Power Industry Reform Act) to bring prices down as compared to what they are currently paying,” Petilla said.

He cautioned this early though that “the extent of the reduction would depend on how each large electricity user business would negotiate their contracts with gencos (generation companies).” (MMV)   source