By Lenie Lectura - April 16,
2018
The Department of Energy (DOE) is
now aiming to complete the electrification of the entire country by next
year—or three years ahead of the original target—by easing the entry of
private-sector players into the far-flung areas’ power markets.
“We need to fast-track it. We need
to accomplish it earlier, at the earliest 2019,” Energy Secretary Alfonso G.
Cusi said in an interview.
Cusi committed to implement the
directive of President Duterte to remove the barriers to rural electrification.
The President, in a meeting with Cusi and Energy Regulatory Commission (ERC)
Chairman Agnes VST Devanadera, focused on the missionary
electrification in the unserved areas of the country. The Chief Executive made
it clear that he wanted to remove the barriers that are blocking the entry of
the private sector to provide better options and more choices for communities.
According to Cusi, Duterte said:
“This has to stop!” He was referring to the hurdles standing in the way
of the total electrification of the entire country.
The President instructed the DOE and
the ERC to initiate bold executive actions to allow the entry of the private
sector so that the Filipino consumers can have access to adequate and
affordable electricity that will redound to more economic and social benefits.
This means private investors must
assist ailing electric cooperatives (ECs) that are regarded as nonperforming or
ineffective and, thus, are barriers to total electrification.
“The wisdom of the President is
using emerging technologies targeting far-flung barangays which have had no
power. The DOE is fully committed in pursuing his directive,” Cusi said.
The DOE, according to Energy
Undersecretary Felix William B. Fuentebella, will craft a master plan to help
achieve its goal. The blueprint will include an inventory of unserved and
served areas, timeline, among others.
“We should have an inventory. The
ECs and DUs must submit first a report on the compliance of serving the areas
assigned to them. That’s part of the master plan. Also, the master plan should
include a business plan not only for ECs but for DUs, as well,” Fuentebella
said in an interview.
He added that the report of the ECs
and DUs must be submitted to the National Electrification Administration
(NEA) within 45 days from the directive issued on March 22. NEA, in
turn, has 15 days to countercheck and finalize a report before turning it over
to the DOE.
Resistance
The DOE intends to pursue this, amid
strong opposition from ECs.
The Philippine Rural Electric
Cooperatives Association Inc. (Philreca) and the Philippine Federation of
Electric Cooperatives (Philfeco) said the proposed entry of private investors
into the rural-electrification program is based on a wrong premise—that there
are nonperforming ECs which are considered barriers to total electrification.
They stressed that ECs are not
ineffective. Citing official data, the groups said only 8 percent of the total
121 ECs in the country are ailing or underperforming, but definitely not
nonperforming.
“And these are, likewise, not caused
by our perceived operational inefficiency, but due to events and situations
beyond our control, like natural calamities, political strife, insurgency and
more often than not topographic challenges,” Philreca President Presley de
Jesus said.
Notwithstanding these difficulties,
de Jesus stressed that most ECs have delivered on their mandate to help the
government promote sustainable rural development through electricity.
Therefore, they cannot be expected to peacefully yield their jobs anytime soon
to the private sector.
“We in the electric cooperative
industry stand firm in our dogged resolve to fulfill the mission of providing
quality service to the country’s rural communities and meet the original
objective of total electrification. Because we can, we will stay the course and
finish it,” de Jesus said.
While they welcome competition, the
EC leaders feared that a state policy on the entry of deep-pocketed private
firms in rural electrification lays the groundwork for their cooperatives to
give up the ghost, so to speak, affecting the welfare of their stakeholders.
Reynaldo Lazo, president of the
Philippine Association of Board of Directors of Rural Electric Cooperatives
(Pabrec), thus, called on the government to protect the ECs against private
companies that have vested interest in potentially auspicious communities.
“I am okay with the pronouncement of
the DOE, knowing it will benefit the member-consumers in areas that are not yet
electrified. Encouraging private [sector] participation is fine, as long as it
does not interfere and encroach on the operations of the ECs,” Lazo
stated. “Because the way we see it, it’s the start [for private investors]
just to be in, and then later on they are going to be wielding their power and
influence at the expense of our co-ops. We hope this will not happen but that’s
how we see it.”
National Center of Electric
Cooperatives Consumers Inc. (NCECCO) Chairman Akmad Mamalinta shared the same
perspective,
adding that future investors must ensure that their participation is purely based on the intent to give the public better options and not fueled by their greed.
adding that future investors must ensure that their participation is purely based on the intent to give the public better options and not fueled by their greed.
“I believe the regulations are in
place before any project can be undertaken. There must be some terms of
reference [before they can proceed], which should be the case. They can’t do it
just like that,” Mamalinta noted.
“They [private investors] have to
work closely with our state regulators to make sure that the other aspects and
component of [their] operations will be done in the context of government
efforts to provide better electricity services at lower cost to the consumers,”
the NCECCO chief added.
Review
A lawmaker is calling for a thorough
review of the country’s national-electrification program, with the aim of
assessing existing strategies in closing the gap in the number of households
across the country that have yet to be energized.
“We want to check on the status of
electrification of the country to assess and possibly revise the national
electrification strategy,” said Sen. Sherwin T. Gatchalian, who filed Senate
Resolution 695.
At present, the government is
employing three methods in pursuing the total electrification agenda. The first
is through grid extension by ECs, which is carried out by the NEA. The second
is by missionary electrification in off-grid areas, which is being implemented
by the National Power Corp. The last method is through the entry of qualified
third parties in remote and unviable areas.
The said methods are being
subsidized, either through government appropriations or pass-on charges to
consumers through the universal charge for missionary electrification.
From 2016 to 2018 the government
allocated P5.45 billion for sitio (village) electrification and P3.97 billion
for the supply of electricity in missionary areas. In addition, around P73
billion has been remitted from the universal charge for missionary
electrification collection, as of December 2017.
Despite all efforts, however,
Gatchalian said a total of 2,399,108 of unserved households are still not
connected to the power grid, equivalent to 16 percent of households in the
entire country. The majority of this number is found in Mindanao (1,345,116
households), while Luzon and the Visayas share the remaining half (529,952 and
524,040 households, respectively).
“It is necessary to review the
national electrification project of the government by identifying which
communities are economically viable for grid extension, how much government
appropriations are necessary to complete the extension, and in how long the
construction can be accomplished,” he said.
Gatchalian, chairman of the Senate
Committee on Energy, also urged the NEA to take advantage of latest
technologies, such as the micro-grid systems, to reach far-flung areas that
have no access to power grid and still remain unserved.
“It is likewise important to know
which communities are best for off-grid electrification, what technologies are
suitable for them, and how fast the entry of qualifies third parties in the
remote and unviable areas can be facilitated,” he added.
Gatchalian also said some private
distribution utilities have already expressed interest in building micro-grid
systems in areas or sitios left unserved or underserved by the ECs.
“Micro-grid systems are now
available here in the Philippines and we can take advantage of this to fill in
the gap under the sitio electrification program. But if there’s an opportunity
for the private sector to come in, then, let’s embrace it,” he said.
Supportive
Power firms are interested to help the
government’s electrification program.
“We should help ailing ECs. That
way, they can improve service,” Aboitiz Power Corp. President Antonio Moraza
said in a text message.
SMC Power, Semirara Mining and Power
Corp. and AC Energy, likewise, indicated they are supportive and will extend
their assistance in any way they can to help achieve the government’s
electrification program as soon as possible.
For 2018 the NEA aims to complete at
least 1,817 sitios with a budget allocation of P1.817 billion. This is based on
the company’s approved budget under the 2017 General Appropriations Act and the
2018 National Expenditure Program.
Under Phase 2 of the Sitio
Electrification Program, a total of 19,740 sitios nationwide have been
energized. In Luzon 6,541 (33 percent) areas now have electricity; 4,664 (24
percent) in the Visayas; and 8,535 (43 percent) in Mindanao.
While the DOE and the ECs have yet
to settle their differences, authorities are keen on making their goal happen.
“We will always look at the legal option of the government,” Fuentebella said.
“The end-goal here is to remove all barriers so that we can achieve total
electrification.”
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