DOE hit for lease of costly gensets

"They are resorting to desperate and costly measures." Thus declared Foundation for National Development (FND) chairman Antonio Hombrebueno, referring to the decision of the government and the Department of Energy (DOE) to lease a 25-megawatt (MW) generator set for Oriental Mindoro from Singapore-based GE Energy Rentals worth $6 million. Power from the generator set is estimated to cost between P5 to P6/kwh.

Hombrebueno said that the cost is much higher than the P2.12 per kwh Napocor selling rate for Luzon or the P2.24 per kwh rate for Visayas.

"This confirms that the power crisis is already upon us and we can expect electricity outages maybe even sooner than 2006," Hombrebueno said.

"The $6-million amount is just for the lease, if we add the diesel fuel to be used and the operating costs, the actual cost of this power deployment will amount to about P5.50 per kwh. That’s almost triple the present Napocor rate," noted Hombrebueno.

Hombrebueno said that the DoE is resorting to these very expensive and desperate measures precisely because of poor planning with regard to the power industry. He specifically took to task the DOE for not setting the stage for the privatization and restructuring of the power industry.

"If the Energy Department had fulfilled its mandate properly and on schedule, the power industry would have been more viable, and investors would have come in and set up the additional power plants needed to address our supply shortfalls. But because it failed to do that, it now has to implement last-ditch measures at huge expense to our national coffers."

He also observed that this is the second agreement entered with GE Energy Rentals for the lease of generator sets. The first was a $3.4-million contract for the rental of a 15-MW generator set for NPC’s Irawan substation in Puerto Princesa, Palawan.

"It is disturbing that government has announced that they will continue to lease these costly generator sets to supposedly augment power reserves in Mindoro, Palawan, and the Cebu-Negros-Panay grids. This actually means our power generation capacities are simply inadequate."

"If the DoE had planned for power capacities on day one, then we will not be facing this hard choice," and the DOE is solely to blame for it."

Hombrebueno said that the DOE should concentrate on long-term solutions and not rely on stopgap measures. These measures are expensive and will not address the worsening problems of our power industry.