New privatization options for Agus-Pulangui plants eyed

by Myrna Velasco – January 30, 2016

from Manila Bulletin

New options are being explored on the proposed privatization of the Agus and Pulangui hydropower complexes despite the sustained opposition of some groups in Mindanao.

According to Romeo Montenegro, director for Investment Promotions and Public Affairs of the Mindanao Development Authority (MinDA), several privatization options are being dangled for the grid’s biggest hydro assets – one is offering its capacity to the private sector via an independent power producer administrator (IPPA) similar to what is being done for some plants in the region – such as the Mt. Apo geothermal and the Mindanao coal-fired plants.

Most Mindanaoans though are not receptive of such proposal, he said, qualifying that once the facilities will already be in private hands, they may just take the liberty of contracting the Agus-Pulangui plants’ capacity at any cost – to the detriment of the consumers in the area.

He stressed that majority of stakeholders in Mindanao still cannot let the Agus-Pulangui hydropower complexes go into private sector hands, with fears still raging that its divestment can virulently drive up power rates in the grid.

“Our position remains. It’s not just MinDA, it’s also an overwhelming position of a large section of Mindanao stakeholders,” Montenegro said, citing in particular the electric cooperatives (ECs) in the area as well as the local government leaders.

He expounded “in terms of whether or not we agree to privatizing Agus and Pulangui plants, no!”

Montenegro added that even those in the private sector – the business community in particular, had been more acquiescent to the proposal of creating a Mindanao Power Corporation that shall take over the operations and management of the Agus-Pulangui plants.

“Our argument, our business proposition remains the same insofar as what benefits Mindanao by having Agus-Pulangui operated and its revenues plowed back to Mindanao rather than remitted to the national government,” the MinDA official said.

Montenegro noted what they want to achieve from their stance is very simple, with the hydro assets earning P5 billion to P7 billion annually, they prefer that the power utilities in the area, like the ECs, would just fully benefit from it.

He said “it is not yet viable for it (Agus-Pulangui) to be privatized, because it’s still contributing a large part to the Mindanao grid and distributed pro-rated to electric cooperatives.”

Montenegro emphasized that the Agus-Pulangui facilities are by now “the only remaining cheaper source of electricity for electric cooperatives in Mindanao and that gives Mindanao comparative advantage over Luzon and Visayas, which rates have been averaging P10 to P11 versus Mindanao’s P8 per kilowatt hour.”