More investments in power sector sought

Energy Secretary Raphael P.M. Lotilla has urged existing power producers to continue to invest in the country’s power sector to help resolve the impending power shortage in Visayas and Luzon in the next three to four years.

"We would like to have all other domestic and foreign companies, expand their operations in the country," Lotilla said.

In a recent plant tour in Pagbilao coal-fired power facility in Quezon which is owned by Mirant Philippines Inc., Lotilla urged Mirant officials to continue to support the government’s endeavor in rendering sustainable supply of power to the Filipino people.

"We’d like to see Mirant expand its operations in the country. And so we would like to have all other domestic and foreign companies," he said.

Lotilla, at government’s end, said they would try to make the environment as friendly as possible for the investors.

"We want to make sire that all the policy and regulatory framework will allow them to do so," the country’s top energy official said.

He also persuaded Mirant to pursue its future plans to expand in the areas where there would be possible power shortages.

"Mirant has proposed in the past, which they are considering to address a number of shortages in power," he said.

The energy chief recognized the effort of Mirant to address possible power supply problem in Luzon in the next five years.

"Before when we were projecting a power supply demand forecast, our forecast showed we were going to have a shortage by 2008-2009 (in Luzon). Then they (Mirant) also had to respond to that projection and had proposed including the expansion of the Pagbilao or conversion from BOT (build-operate-transfer) to BOO (build-operate-own)," Lotilla said.

Lotilla also welcomed other investors in the Visayas region. "That challenge remains in the Visayas, for example, we still forecast a shortage by 2009-2010, if the Cebu distribution utilities decide to bid gap then we will like to see as many participants in that process to be there, as we need as many," he said.

Lotilla said he would like to see more power firms putting up more power generating facilities. "We will welcome a good bid by any company in the sense that we want to encourage as we cannot dictate them to expand their operations in the Philippines," he said.

Early this year, Lotilla said he believed that there remains a strong and consistent investor interest in the country’s power generating assets that is expected to further push privatization in the energy sector.

"We have reason to be confident that despite the perceived political tension in the country, local and foreign investors have long-term prospects for investment in mind, specifically in the power sector," Lotilla said.

The government began privatizing state-owned power plants in March 2004 as part of the restructuring of the power sector. The Power Sector Assets and Liabilities Management Corp. (PSALM), an entity tasked to sell the assets of the National Power Corp. (Napocor), has since successfully bid out six power plants, five of which are hydropower. These are Talomo in Davao, the 1.6-MW Agusan plant in Bukidnon, the 1.8-MW Barit plant in Camarines Sur, the 0.4-MW Cawayan plant in Sorsogon, and the 1.2-MW Loboc plant in Bohol. Proceeds from the sale of these hydropower plants amount to $5.2 million.

PSALM also bid out the 600-MW coal-fired Masinloc plant in Zambales with the winning bid amounting to $561.7 million. Total proceeds from the successful sale of the six plants amount to $566.9 million, or about P31.75 billion, which will be used to settle a portion of the debts of the Napocor.

The government, through PSALM, is set to privatize seven more hydropower plants. These are the 12-MW Masiway plant, the 100-MW Pantabangan plant, the 360-MW Magat plant, the 75-MW Ambuklao plant, the 100-MW Binga plant, the 246-MW Angat plant, and the 0.8-MW Amlan plant.