Joust for water control

Whoever wins the auction in the privatization of the 246-megawatt Angat hydroelectric power plant in Bulacan (scheduled later this month by the Power Sector Assets and Liabilities Management Corp. or PSALM) will take on a major role in a big three-pronged battle of interests.

The Angat power plant is part of the assets scheduled for disposal by PSALM this year in compliance with the stipulations in the Electric Power Industry Reform Act.

Joining the usual bidders regularly seen during these tenders, i.e., SN Aboitiz Power, First Gen and Trans-Asia, is the newly formed First Gen Northern Energy Corp., a joint venture of Manny Pangilinan’s Metro Pacific Investments Corp., Ayala Corp., and Lopez-owned First Gen Corp.

First Gen Northern cannot really be categorically as representing the water companies since Metro Pacific and First Gen Corp. are more known for their power sector interests. It is the presence, however, of Ayala Corp., which owns Manila Water, which has given the firm a different complexion.

While Ayala has issued a statement that the joint venture is in keeping with their earlier thrust to move in to the power sector, the company has been known to be actively seeking new sources of water that they will be able to supply to their customers within their assigned territory.

Long history

Angat Dam, which was built some 45 years ago, was conceived to be a multipurpose facility. Originally, two-thirds of the water was designed to irrigate some 31,000 hectares of rice land in Bulacan and Pampanga, at the same time generate hydroelectric power. The remaining water would supply domestic needs through the Metropolitan Waterworks and Sewerage System.

Over time, however, these ratios were reversed as Metro Manila’s population grew. Currently, with reduced inflow and more erratic weather patterns aggravating the situation, much less water is available to the farmers for irrigation and to the National Power Corp. for its turbines.

This has created a conflict among MWSS plus its concessionaires (Manila Water for eastern Metro Manila and parts of Rizal Province, and Maynilad for the Metro Manila’s west zone), the Central Luzon farmers who rely on the water for rice irrigation, and Napocor especially when power supply from other sources is disrupted.

Valid interests, urgent needs

All three represent valid interests and urgent needs.

Angat Dam is essentially the sole water source for Metro Manila. There are a number of alternative water channels currently being looked at, but these are still subject to a lot of discussion and agreements. In the meantime, MWSS and its concessionaires have to firmly press for priority allocation.

Strongly supporting this area of interest are human rights groups, one being Water for the People Network which released a statement that the water sector, instead of private power companies, should take the lead in managing the facilities of Angat Dam.

In fact, the water companies have asked for a change in the release protocol to assure more reserves for domestic use, especially as Napocor released a lot of water for its turbines in late 2009 possibly to enhance the value of its equipment scheduled for bid in April.

The interest of farmers, on the other hand, is to be able to keep their production at economical levels and be able to bring home a decent earning. They are only too aware that the problem is no longer just confined to producing rice, but also from the threat of importations.

To be able to protect their rice fields as well as their incomes, irrigation from Angat River is critical. Otherwise, waiting for rain (or nothing when there is severe drought) means huge losses and rising debts for the farmers and their families.

Napocor, on the other hand, is forced to use Angat especially during the dry months in order to supplement other power sources that may run into problems. Recently, Luzon experienced erratic electricity supply because of insufficient power generation.

Aside from accidental and planned shutdowns of several power plants in the Luzon grid since last year, the heat from El Nino contributed to a significant rise in power demand. As power supply in the region continues to be unreliable, Angat will always be a convenient source of electricity.

Priority concerns

First Gen Northern is expected to make a strong bid for Angat. But even if the joint venture succeeds, the issue of using water for irrigation and for the hydroelectric plant will have to be addressed, perhaps by clearer and more realistic terms.

Currently, the water level at Angat is projected to be at the lower rule curve (where no more releases for irrigation will be permitted), and will likely dip below its historical low of 158 meters by June, even with a 25 percent reduction in releases for domestic use.

More than ever, especially during the dry months when irrigation water is most needed, new and more sustainable solutions are needed to bring a steady supply for rice fields and other farms. One suggestion is to harness other surface water such as the Pampanga River.

On the other hand, the energy sector will seriously have to look at the growing critical problem of providing the country with adequate sources of new and adequate energy to supplement the existing power plants and in view of the vulnerability of hydropower under changing global climate conditions.

No midnight water project award, please

For MWSS, its concessionaires and consumers, the water situation has other dimensions. The reality that Angat will not forever be enough to supply the drinking and other water requirements of a growing metropolis should jolt MWSS, the responsible government agency, to look for an alternative solution to this reality. Metro Manila, with over 14 million people, cannot continue to take the risk of relying on just one source for its water.

That being said, there is no justification, however, to railroad a water source project that will cause more burden to consumers in the coming years. As the current administration winds down, there is great temptation for water officials to push hard for a preferred water source project in the guise of purportedly pursuing public welfare (or more of personal and favored group interest?).

At present, some MWSS officials are reportedly silently reviving the controversial $1.3 billion Laiban water dam project in the midst of talks of impending water supply source difficulties. As an Easter wish, let’s pray they don’t succumb to temptation and close their eyes to other viable options.

Should you wish to share any insights, write me at Link Edge, 25^th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.