DOE starts enticing new power investments

By Myrna M. Velasco – May 22, 2019, 10:00 PM
from Manila Bulletin

Without it admitting yet that it might have missed planning trajectories, the Department of Energy (DOE) is finally stepping up into inviting new power projects to satiate the country’s long-term energy needs.

With the “ Build, Build, Build” infrastructure development paradigm being pushed by the Duterte administration coupled with a growing economy, it is highly manifest that the country’s energy demand will be on a continuous uptrend in the coming years.

DOE Undersecretary Felix William B. Fuentebella sounded off appeals through the media for power investors “to start adding capacities as the country’s energy demand has been on the rise.”

That was the same invitation that Energy Secretary Alfonso G. Cusi had been voicing out not just to domestic power investors, but even to foreign companies in his trips overseas – primarily the Chinese and Japanese companies that he has been courting to invest in “merchant power plants” in the country.

The energy chief said his invitation to Chinese firms had been as early as 2016 – during President Rodrigo Duterte’s first state visit in China, he reinforced that in the recent one, but until now these have yet to yield any concrete result.

“For China, that was 2016 or 2017, we already had our MOU (memorandum of understanding) and then they came here and they did a study. They said one plant is to be sited in the Visayas and another in Luzon,” the energy chief said. Nevertheless, actual project blueprints had not been cast to-date.

Cusi qualified the Chinese firm had been looking at putting up “merchant power plants” that will lean on coal technology – meaning, there shall be no bilateral contracts or off-take agreements on their generated electricity.

When the media asked why after three years the Chinese firm had not concretized any investment yet, Cusi is uncertain as to the intervening factors as he noted that his discussion was with the National Energy Administration (NEA) of China, which he claimed is the counterpart agency of the Philippine DOE.

And, during another visit to Japan, he extended the same invitation for “merchant plants” to the Japanese investors in his discussions with the Ministry of Economy, Trade and industry (METI).

“I also invited the Japanese because they might say why are we just inviting the Chinese, so the first time the President went to japan, during the METI meeting, I also asked that for merchant power plants – that the Japanese can invest here,” Cusi said.

As it stands today though, most of the power plant investments committed to the country are still to the credit of the past administration – and for now, Cusi is still counting on the targeted coal plants of the Chinese investors as his possible accomplishment on the power investment invitation domain.

By classification, “committed power projects” are those plants that are already shovel-ready – and complete with financial closing and engagement of engineering, procurement and construction (EPC) contractor.

Under Cusi’s tenure at the department, there is not a single project that has reached such phase – and, if the DOE cannot fix the scenario of strained supply before the end of Duterte’s term, this administration will be leaving the legacy of a power crisis.

In the recent China visit of Duterte, four energy-related projects have been signed, including the contract agreement for China Energy Co. Ltd, to construct the proposed 250-megawatt South Pulangui hydroelectric power project in Mindanao grid.

The rest are renewable energy investments and a planned US$1.5-billion petrochemical refinery, but there is none on the merchant coal-fired power projects being wished for by the energy secretary.