Sugar millers eye sale of excess power from plants

The local sugar milling industry is eyeing into the possibility of  converting excess energy from their plants into electricity that could partially address the anticipated power shortage in the country.

Industry sources said the plan will enable sugar producers and millers to use the converted power facility for the expansion of  their operations and even sell electricity to other potential power users in their respective areas.

"The plan if realized, will give the industry additional revenues and this could encourage millers and producers to undertake more expansion and modernization of their facilities. By generating their own electricity,  they can save a lot of  money and use this to invest in more cost-efficient operations. This will certainly go a long way in their efforts to bring their production costs up to par with competitors such as Thailand, South Africa and even Brazil," an official of  the Philippine Sugar Milling Association said.

The millers, according to sources, are also keen on diversifying and supplying excess power to small industries.

"This should really be good for the government which is having difficulty attracting new investors in the electricity sector. Given enough support and incentives, the sugar millers’ plan could contribute in alleviating the looming power crisis," the same PSMA official said.

Earlier, Energy Secretary Vincent Perez said the government will intensify efforts to stem a looming power shortage and ensure competitive power rates by 2010.

As early as last year, the Visayas and Mindanao regions have already been experiencing shortages in meeting peak loads.  Unless power generation capacity is increased and transmission infrastructure and efficiencies are improved, power shortages are seen to spread nationwide by 2007.

The DOE estimated that the economy could lose up to P2 billion a day if a 24-hour blackout nationwide occurs.

Government estimates that with a projected GDP growth of  five percent in the medium-term,  the country will require at least 10,000 megawatts of new power generation facilities for growth to be sustained.

Under the Philippine Energy Plan of 2004-2013, about  P500 billion is required to set off programs in the oil, gas, hydropower, geothermal and coal sectors. 

However, there has been no major  power generation projects in recent years that will ensure adequate power supply in the coming years because of discouraging measures such as the renegotiation of power contracts of independent power producers (IPPs) contracted in the 1990 power crisis.

Because of  the urgency of solving the power crisis, these IPP projects were fast-tracked although it proved to be more expensive. Thus, the country has one of the highest power rates in Asia, second only to Japan.

Another problem that requires immediate action is the staggering debt of  the state-run National Power Corp. (Napocor) which now stands at P500 billion. While government said it has no choice but to absorb the company’s  debts, the Electric Power Industry Reform Act passed in 2001 is specific that government can only assume up to P200 billion of  Napocor’s obligations.

Perez said, however, that government will come up with concrete measures to improve the electricity sector which he said should renew the confidence of  investors to start looking at new opportunities in the local power sector.