GBPC wants government to issue investment guide for power-plant operators, owners

By Lenie Lectura – February 14, 2017

from Business Mirror

GLOBAL Business Power Corp. (GBPC) urged the government to issue a more defined policy that will guide power-plant operators and owners regarding their investment plans in the years to come.

“We are business developers. We build power projects in line with government policy. Just give us a clean state of rules then we, power developers, will pursue these projects,” GBPC Assistant Vice President for Business Development Janssen de la Cruz said on the sidelines of the Asian Power Utility Forum held in Makati City on Tuesday.

GBPC is one of the leading independent-power producers in the Visayas and Mindoro, with facilities located in Cebu, Iloilo, Aklan and Mindoro.

When asked what existing policies in the power sector need to be improved, he identified the Competitive Selection Process (CSP), among others.

With CSP, distribution utilities (DUs) and electric cooperatives (ECs) are required to undertake competitive bidding to secure power-supply agreements (PSAs) with generation companies.

“The regulatory environment now is CSP. For lack of a better term, the cheapest guy wins. For as long as there’s coal, then coal will always have the advantage because it’s going to be the cheapest in the room. Where is this going? It depends on the regulators,” said de la Cruz during a panel discussion.

He said as long as CSP is enforced, then “it will predominantly be coal because of its price”.

“I think it will stay the same for the moment until they change the selection process,” de la Cruz said.

The company official said power firms should be ready with the impending overcapacity in power generation as anticipated to happen between 2020 and 2025.

“The problem is a lot of the reliable 20-year-old plants will eventually go offline and we must be prepared for that. Short term to midterm, I don’t think we will be experiencing a lot of demand versus supply. There will be a little bit more supply available because of supply coming in. But if we do not start building and planning now…there has to be some security for us developers to start telling our investors it’s ‘go build new plants going forward,’” de la Cruz said.

In Mindanao oversupply is happening now, with 1,000 megawatt more of additional capacity coming in.

Energy Secretary Alfonso G. Cusi said he is aware of the situation. He, however, downplayed the possible disadvantages, if any, that may result in the oversupply of power.

“I just had a meeting in Mindanao. The generation companies there see Mindanao has already excess power. The latest peak demand is 1,600 MW and Mindanao is now running at 2,800 MW of power supply and another 1,000 MW more forthcoming up to late-2017. So, they are saying there could be excess capacity.  But I asked this. Which is a better problem? Having a power shortage or excess in power?” Cusi said.

From the point of view of the consumers, having excess power supply is a “welcome development”.

“It really depends on who is talking. The one selling power says there is oversupply. From the point of view of the regulators, we would like to have sufficient supply to encourage development in tourism, for instance. It is also good for the households. Manufacturing plants also need power. We have to factor all of those. Oversupply, in case there is one, that will not be a problem,” Cusi said. “I don’t care where power is coming from for as long as there is power. Beggars can’t be choosers.”

Latest data from the Department of Energy said by 2020, the committed projects in Luzon could reach 4,101.375 MW; 1,687.94 MW for Mindanao; and 471.58 MW for the Visayas.

The data further showed 17,145.415 MW of indicative capacity are listed to come in by 2021 and 2022 across the three grids, with the bulk, or 11,607.505 MW, to be located in Luzon.

In the Visayas and Mindanao there are around 3,027.97 MW and 2,509.94 MW of indicative capacity.