Iloilo City at night. (Photo by Tara Yap)

Iloilo City at night. (Photo by Tara Yap)

By Francis Allan L. Angelo

 

ILOILO City and the rest of Panay Island are facing another debacle in the worsening power problems of the region.

 

Energy industry sources said SPC Power Corp., which bought the 146.5-megawatt Panay Diesel Power Plant (PDPP) operated by the National Power Corp. (Napocor) at Brgy. Tinocuan, Dingle, Iloilo, is hesitant to operate the plant because of the price of electricity.

 

The problem surfaced during the meeting Saturday of power industry stakeholders in Panay initiated by Dr. Raul Banias, presidential assistant for Western Visayas.

 

Banias said SPC will negotiate with electric cooperatives in Panay regarding the new price of electricity once the firm takes over PDPP operations March 25 from Napocor.

 

“As a merchant power producer, SPC will not be able to sell power at subsidized rates which Napocor offered to cooperatives. SPC will have to negotiate with the cooperatives regarding the price after the turnover of PDPP. The cooperatives will agree with Salcon’s price, well and good. If they cannot agree on the terms, SPC will not operate the plant and we will have bigger problems,” Banias said.

 

NPC sells electricity to cooperatives at around P2.80 per kilowatt-hour, which is cheap for power produced by a diesel-fired plant because of government subsidy.

 

Prevailing industry rates peg electricity from diesel-fired power plants at P8 to P9 per kWh depending on the fluctuations of oil prices in the world market and the peso-dollar exchange rate.

 

Engr. Edgar Mana-ay, who worked in the energy sector for more than 20 years, doubts if SPC will operate if the firm follows NPC’s subsidized rates.

 

“If the price is doubled or tripled up to P9 per kWh, maybe they (SPC) will continue the operation of the dingle diesel plant,” Mana-ay said.

 

If SPC does not run PDPP, Banias said Panay Island will lose some 50-60 megawatts of power, compounding the power woes of the island which is already reeling from 9-hour rotating brownouts.

 

The dilemma will trickle down to Iloilo City which draws 15MW from Napocor through its interconnection with Panay Electric Co. (Peco), the sole power distributor in the metropolis.

 

Mayor Jerry Treñas said Peco is only getting 8MW out of the 15MW it contracted from Napocor.

 

Iloilo City’s main source of power is Panay Power Corp. (PPC) whose mother company, Global Business Power Corp. (GBPC), plans to construct a 164-MW coal-fired power plant.

 

“As we all know, demand for power in Iloilo City increases during summer season. It’s a critical period for the city. If there are problems with GBPC’s plants, where shall we get power when PDPP is not running?” Banias said

 

Banias said they came up immediate solutions to SPC’s problems but he doubts if these are feasible.

 

“One, we can opt to delay the turnover of PDPP to SPC but this is not possible. Another option is to transfer Power Barge 104 from Davao City but residents and politicians there will certainly object,” he added.

 

Another solution is the deployment of 15 units of generator sets in Iloilo City which Napocor promised to Mayor Treñas.

 

Treñas will ask President Gloria Arroyo to expedite the transfer of the gen-sets, which have a total capacity of 15MW, and avert a power shortage in the metropolis.

 

The President will arrive in Iloilo City today to inaugurate the expansion of a call center.

 

Atty. Dennis Ventilacion, president of Iloilo Electric Cooperative-2, said their power purchase contracts with Napocor are good until December 2010.

 

Ventilacion said they expect SPC to assume Napocor’s contracts with the cooperatives “but the price would reflect the true cost of power.”

 

“We expect electricity rates to increase once SPC takes over PDPP operations. Another problem is when SPC withdraws some of the plant’s capacity from the market because SPC might not rehabilitate some of the engines for economic reasons,” Ventilacion said.

 

SPC Power Corp. (SPC), formerly Salcon Power Corp., won the bidding for the 146.5-megawatt (MW) Panay and 22-MW Bohol diesel power plants November 12, 2008.

 

The Power Sector Assets and Liabilities Management Corp. (PSALM) said SPC outbid two other firms after submitting the highest offer of $5.86 million for the two plants.

 

PSALM oversees the sale of government’s power assets which is mandated by the Electric Power Industry Reform Act (Epira).

 

The other bidders for PDPP and Bohol plant were Therma Power-Visayas, a Philippine corporation owned by Aboitiz Power Corp., and Trans-Asia Oil and Energy Development Corp. of Philippine Investment Management Inc. (Phinma).

 

Organized in 1994, SPC also won the contract for Napocor’s 203.8-MW Naga power plant complex in Cebu under a rehabilitation, operation, maintenance and management (ROMM) agreement.