PNOC to put up new energy service company

MANILA, Philippines - State-owned Philippine National Oil Co. (PNOC) will put up a new subsidiary to facilitate a viable energy service company (ESCO) industry.

At the sidelines of the Energy Management Forum sponsored by global consumer electronics giant Philips, Energy Secretary and PNOC chairman Angelo Reyes told reporters that “the government’s strategy is to develop a working model of a Super ESCO as a subsidiary of the PNOC.

Reyes said this Super ESCO will develop projects for its own implementation for the public sector and support development of other ESCOs (for the private sector) by providing financial and technical advisory support.

Based on the proposed model, a typical ESCO would offer a range of services such as preliminary feasibility analysis including detailed audits of facilities and design of energy-efficiency options and financing.

ESCOs will also be involved in installation services and management; operations, maintenance and performance monitoring; and promotion of energy-efficiency technologies and services.

The energy chief noted that a single organization leading to all ESCO-related activities will minimize transaction costs often necessary for successful implementation of a benefit-sharing mechanism between a range of participants through financial, technical and performance guarantees.

Privately-owned ESCOs and end-users may be able to utilize both finance and technical expertise of the Super ESCO. This component has a funding allotment of $8 million.

Reyes said the creation of ESCOs is one of the components of the Philippine Energy Efficiency Project (PEEP).

PEEP, a by-product of the 2008 Philippine Energy Summit, is a project that aims to replace about 13 million incandescent bulbs in use in the country with compact flourescent lamps (CFLs).

This project, with an end of achieving reduced peak demand of 450 megawatt (MW) and reduced oil imports of $120 million each year, will also result to deferred power generation of 1,300 MW or $300 million each year.

PEEP will likewise lead to Clean Development Mechanism (CDM) revenues of about $10 million for 2010-2012.

According to Reyes, it will also create an energy efficient market which is the most effective way to reduce the carbon footprint, stretch supplies and improve energy security.

Aside from the formation of ESCOs, PEEP is also expected to implement the lighting retrofits in selected government buildings and implement energy-efficeint public lighting programs.

The project, he said, aims to expand the testing laboratory capacity and establish a mercury waste management plant for fluorescent lighting.

It will also pave the way for the implementation of a certification scheme for energy-efficient buildings.

Reyes said under the PEEP, they will carry out the development and implementation of a communication and social mobilization program.

PEEP is financed through a $31.1-million loan from the Asian Development Bank. The loan will have a 25-year term including a grace period of five years.

The Asian Clean Energy Fund under the Clean Energy Financing Partnership Facility will provide grant co-financing equivalent to $1.5 million, with the Philippine government financing $13.9 million.