Europe-PH News

This comes after leaders of the House of Representatives on Thursday last week filed a joint resolution that provides steps Malacañang can take to plug the power gap expected to hit Luzon next year.

The resolution provides a “carrot-and-stick” scheme to encourage participation in the Interruptible Load Program (ILP). It also pushes for fast-tracking of committed power projects, as well as for energy efficiency and conservation measures.

The four-page resolution states the government now projects a need for 1,004 additional megawatts (MW) -- which includes a 404-MW contingency reserve -- between March and July in Luzon, which is estimated to account for about 70% of the country’s production.

“The joint resolution looks okay as this has been what the business community has been pushing for, particularly the mechanism for reimbursing the cost of running private generators,” Gregorio S. Navarro, president of the Management Association of the Philippines (MAP), said in a text message last weekend.

The resolution gives private firms up to Dec. 31 to sign up for the ILP, a measure that taps companies to run their own power generators in exchange for compensation in order to ease demand in the grid during peak hours. Firms that sign up will be reimbursed -- without having to pay value-added tax (VAT) for such payment -- for fuel expenses for use of their generators. But the same resolution warns that “any entity with self-generating facilities (SGFs)... not registered under the ILP may be manually de-loaded from the grid without compensation.”

“The resolution addresses the problem well,” said Peter Wallace, who serves as governor to MAP’s Energy Committee. “We need more to join the ILP so greater awareness of the program is needed as there are enough SGFs to meet the possible shortfall.”

Besides ILP, business groups also support energy efficiency and conservation measures, which the European Chamber of Commerce of the Philippines (ECCP) had earlier estimated could yield up to 400-MW additional capacity.

“The demand savings portion of the resolution will require massive information campaign but if we can get government and private to cooperate, we can probably avoid or at least minimize outages,” MAP’s Mr. Navarro said.

“However, these are just temporary solutions. New power generating base load plants are the real answer to supply problems.”

For his part, ECCP Executive Vice-President Henry J. Schumacher, said: “We believe that the combined efforts to quasi-mandate the ILP and strongly encourage investments on energy conservation and energy efficiency can bridge the envisaged shortfalls.”

“We are of the opinion that everybody is call upon to be part of the solution,” Mr. Schumacher added.

The Semiconductors and Electronics Industries in the Philippines, Inc. (SEIPI) said it was among the groups consulted by the Joint Congressional Power Commission in crafting a resolution.

“We support the joint resolution granting the President emergency powers to ensure that we do not have brownouts during summer 2015,” SEIPI President Dan C. Lachica said separately, adding that the group particularly backs the provision of tax incentive and fuel subsidy to encourage participation in the ILP.

“These powers are not meant to buy or lease generators -- a very expensive option at P6 billion for every 300 MW or P14 billion for 700 MW...” he added.

“At maximum estimated P80 million per month or at most P240 million for four months, this amount is still much less than the P14 billion to buy or lease generators.”

Sought for comment, American Chamber of the Philippines Senior Advisor John D. Forbes said: “After all the consultation that went into the resolution, I would hope it would really mobilize enough added power to avoid brownouts.”

THE CLOCK TICKS
President Benigno S.C. Aquino III had formally asked Congress last Sept. 12 for special authority to ensure additional generating capacities come on stream in Luzon, including through the lease or purchase of generators, during 2015’s summer months by invoking the power crisis provision of Republic Act No. 9136, or the Electric Power Industry Reform Act of 2001.

Mr. Aquino has already conceded that time has run out for the purchase or leasing of generators, as it takes about six months to contract the additional megawatts.

Presidential Communications Secretary Herminio B. Coloma, Jr. said last Friday that Malacañang awaits the final version of the resolution.

While it is unclear if the Senate will just wait for the House resolution or come up with its own version, one legislative leader said both chambers seek to ensure prompt approval of the measure to give the Executive enough time to address the crisis.

“Since the President wants to fast-track solution, we need to pass this within November,” Oriental Mindoro Rep. Reynaldo V. Umali (2nd district), who heads the House Energy committee, said in a text message.

“Now, both the Senate and Congress are moving together to deliver the emergency power to the President.”

He said his committee has been coordinating with its Senate counterpart on this issue. “We are in discussion with Senator Sergio R. Osmeña III and he is willing to support the joint resolution,” Mr. Umali said.

The lawmaker also acknowledged that “we are running out of time.”

“There are tax perks, such as VAT exemption that needs to be granted to ILP participants that would require legislation. But we do not have time for that anymore. That is the reason why the President should be granted special powers,” Mr. Umali said.

Source: Business World Online