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By Francis Allan L. Angelo

 

WAS the sale of Panay Diesel Power Plant (PDPP) in Dingle, Iloilo advantageous to the government and taxpayers?

 

This is the question that Iloilo 4th district Rep. Ferjenel Biron wants answered even as he plans to file a resolution calling for a House inquiry on the sale of PDPP to Singaporean firm SPC Power Corp.

 

The Power Sector Assets and Liabilities Management Corp. (Psalm) sold PDPP, which is operated by the National Power Corp. (Napocor), to SPC for more than US$5 million dollars (roughly P300 million at the current foreign exchange rate). The sale also included the Bohol Diesel Power Plant.

 

The Dingle power facility is composed of two plants – PDPP1 and PDPP3. PDPP2 is located in Panit-an, Capiz.

 

The government spent around P1 billion to rehabilitate and transfer PDPP3 from Pinamucan, Batangas to Iloilo several years back.

 

Biron said he finds it strange that Psalm and Napocor will sell PDPP at a price lower than its actual market value.

 

“The selling price was lower than the scrap value of the plant. We must look into the process of the sale. Was it advantageous to the government? Was it orderly?” Biron said.

 

The government has been privatizing Napocor assets in keeping with the Electric Power Industry Reform Act (Epira). Part of the asset sales will be used to pay the debts of the state-owned power firm.

 

Biron said Napocor and Psalm had the chance to earn from the PDPP sale “if they only used the fair market value of the plant as the floor price.”

 

“If this is the case, it is useless to privatize Napocor assets because government will end up losing a big amount of money. The price of the PDPP sale is obviously very low,” Biron said.

 

Biron also questioned why the contractual obligations of Napocor to electric cooperatives were not honored in the sale.

 

“The consumers are being held hostage if this is the case. We are held hostage by high cost of power and the prospect of power shortage. This is a triple whammy on consumers because aside from losing money in the sale, we are having serious problems in the cost of power and supply,” he added.

 

Biron said he has nothing against the privatization of Napocor assets “but these should be done in a manner that is advantageous to the government.”

By Francis Allan L. Angelo

 

IT’S not good enough.

 

This was the reaction of an electric cooperative executive to the decision to let SPC Power Corp. operate Panay Diesel Power Plant (PDPP) in Dingle, Iloilo with subsidy from the government.

 

Engr. Wilfred Billena, Iloilo Electric Cooperative (Ileco) 1 general manager, said the problem brought about by the privatization of PDPP brings to fore the need to put up a baseload power plant in Panay.

 

Malacañang decided Wednesday to continue with the turnover of PDDP to SPC March 26.

 

SPC will own the plant and sell power to the three electric cooperatives in Iloilo provided the National Power Corp. (Napocor) and Power Sector Assets and Liabilities Management Corp. (Psalm) will subsidize the Singaporean firm’s operations, a mockery of the government’s privatization thrust.

 

Napocor will provide fuel to PDPP to keep it running and provide power to the cooperatives.

 

The new arrangement will allow electric cooperatives to enjoy the same subsidized rate of P2.80 per kilowatt-hour which Napocor is currently offering.

 

Psalm and Napocor sold PDPP along with the Bohol Diesel Power Plant to SPC for more than US$5 million.

 

The privatization of the plant raised public concerns that it will stop running because of rehabilitation works and the issue on the real cost of power.

 

“We cannot continue like this. We have to have our own power plant in Panay so we will not scrounge for sources when we lose capacities in the grid. This the reason why we continue to contract power from independent power producers to secure our future energy needs,” Billena said.

 

Atty. Dennis Ventilacion, Ileco-2 director, said Napocor has no choice but to join in the said arrangement with SPC because the state-owned power firm has contractual obligations with the electric cooperatives in Panay.

 

Ventilacion also stressed on the need to put up new baseload plants to prevent the same problems that cropped up with PDPP’s privatization.

 

“This is the reason why the infrastructure development committee of the Regional Development Council called for the immediate construction of new power plants but from the looks of it, these projects will not be online by January 2011,” Ventilacion said.

 

Even the Visayas Supply Augmentation Auction (VSAA) program mulled by the Department of Energy to arrest the acute power shortage in Panay is also a temporary solution to the problem.

 

Billena said there is a need to improve the capacity of the submarine cable between Negros and Panay Islands to make VSAA more effective.

 

VSAA aims to tap embedded power generators in Visayas and excess capacities of power plants in Visayas.

 

“We have constraints in the submarine cable and uprating is needed to ensure stable supply. And Panay would still be at the mercy of other power producers as regards the price and stability. These plants will have to decide between making money and maintaining the backup for their franchise areas,” Billena said.

 

Global Business Power Corp. (GBPC) and DM Consunji Inc. (DMCI) are proposing two coal-fired power plants in Panay.

 

GBPC, which belongs to the Metrobank Group, has begun earthworks at its plant site in Brgy. Ingore, LaPaz, Iloilo City. GBPC operates Panay Power Corp., the sole power distributor in Iloilo City. DMCI has yet to begin construction of its plant in Concepcion, Iloilo because of uncertainty over its potential market.

By Francis Allan L. Angelo

 

PANAY Diesel Power Plant (PDPP) will continue to provide electricity at the same subsidized rate after it is turned over to Singaporean firm SPC Power Corp.

 

This was the outcome of the meeting between national officials and Ilonggo leaders in Malacañang Wednesday afternoon relative to concerns raised by electric cooperatives once PDPP is handed over to SPC March 26.

 

The meeting, which started 3pm to 5:45pm, was attended by Executive Secretary Eduardo Ermita, Department of Energy (DoE) Angelo Reyes, Iloilo 3rd district Rep. Arthur Defensor Sr., Iloilo City Mayor Jerry Treñas and presidential assistant for Western Visayas Raul Banias.

 

Also present were officials of the National Power Corp. (Napocor), Power Sector Assets and Liabilities Management Corp. (Psalm), Energy Regulatory Commission and SPC.

 

Defensor said it was agreed that PDPP will continue to provide electricity to the three Iloilo electric cooperatives at the same subsidized rate offered by Napocor.

 

Psalm, which supervises the sale of state-owned power assets, sold PDPP and Bohol Diesel Power Plant to SPC for more than US$5 million.

 

“The plant will be turned over to SPC as scheduled but it will continue to produce and sell electricity at the same subsidized rate (P2.80 per kilowatt-hour). It was also agreed that Psalm and Napocor will shoulder the operation cost of the plant even if it’s handed over to SPC,” Defensor said.

 

The Malacañang meeting was spurred by two concerns raised by electric cooperatives once PDPP is taken over by SPC:

 

– the cooperatives will lose 54 megawatts of electricity should SPC decide to rehabilitate the plant and uncertainties over the cost of power, resulting in longer rotating brownouts in Panay;

 

– consumers will be burdened by expensive power because SPC will now reflect the true cost of power once it runs the plant.

 

Defensor said the arrangement will take effect until the DoE has put in place the Visayas Supply Augmentation Auction (VSAA) program.

 

The VSAA will tap embedded power capacities in the region to make up for the power shortage in the area.

 

Data from the National Grid Corporation of the Philippines (formerly National Transmission Corp.) show that as of March 11, 2009, Panay is suffering from 68MW deficiency while Negros lacks 49.2MW.

 

Cebu, which hosts numerous power plants and located close to the geothermal plants in Samar-Leyte area, lacks 213MW. Bohol province has 34MW deficiency.

 

The power woes of Panay is expected to ease up once major power projects, such as the proposed coal-fired power plant of Global Business Power Corp. (GBPC) in LaPaz, Iloilo City, gets online late next year or early 2011.

 

GBPC, which belongs to the Metrobank group, operates Panay Power Corp., the sole power producer in Iloilo City.

 

Defensor said SPC is also planning to rehabilitate PDPP “because it is very old already.”

 

“The rehabilitation will happen once the VSAA kicks in. Pigado na gid ang PDPP and it needs rehabilitation,” Defensor said.      

 

Iloilo City is also affected by the PDPP sale to SPC because it draws 15MW from Napocor to fill up the metropolis’ power shortage.

Coops rile over PDDP sale

 

By Francis Allan L. Angelo

 

THE privatization of the National Power Corp.’s, (Napocor) Panay diesel-fired Power Plant (PDPP) in Dingle, Iloilo would be disastrous to electric cooperatives and their consumers if they fail to forge agreements with the new owner.

 

This was the contention of Engr. Wilfred Billena, Iloilo Electric Cooperative (Ileco-1), over cable TV talk show Serbisyo Publiko hosted by Iloilo City Councilor Perla Zulueta Sunday.

 

Billena said they get 66% of their 30 megawatt power requirement from PDPP which was sold to SPC Power Corp. for more than US$5 million.

 

Earlier reports said SPC might not operate PDPP after March 26 for two reasons – rehabilitation of the plant and uncertainty over the price of power it will produce.

 

Worse, the power supply agreements between Napocor and Panay electric cooperatives which are good until December 2010 were not included in the sale to SPC.

 

“This is disastrous because we don’t know where to get the electricity we will lose if that happens. The Northern Negros geothermal production field is not performing as expected,” Billena said.

 

Billena said if they negotiate a new power supply agreement with SPC, the price of electricity will surely increase because the new owner will have to offer the true cost of power from a diesel-fired power plant.

 

Atty. Dennis Ventilacion, Ileco-3 director, said they will sue Napocor if it fails to deliver electricity under their supply contract.

 

“Negotiating with SPC is one possibility but Napocor must fulfill their part to deliver power to the cooperatives because we have live contracts with them,” Ventilacion said over The Daily Guardian on Air Saturday program at Aksyon Radyo.

 

Ventilacion said the Power Sector Assets and Liabilities Management Corp. (PSALM) lacked foresight when it failed to include their contracts in the PDPP sale.

 

“We don’t care if PDPP was sold to SPC but we will demand the power we contracted with Napocor until 2010,” Ventilacion said.

 

Ventilacion, meanwhile, said their new power supply agreement with two renewable energy producers and two coal-fired power plants will be available January 2011. 

 

Even Panay Electric Co. (Peco), the sole power distributor in Iloilo City, will also be affected by the looming shutdown of PDPP.

 

Engr. Randy Pastolero, special assistant to Peco president Miguel Cacho, said they have a standing contract with Napocor to get 15MW from the Cebu-Negros-Panay grid. Presently, Peco only gets 8-9MW of the contracted electricity.

 

“Hopefully, Panay Power Corp.’s plants will not experience problems because if they do, we will suffer from brownouts because we don’t have reserve power which we ought to get from Napocor,” Pastolero said.

 

Presidential adviser for Western Visayas Raul Banias said the problems of the cooperatives and Napocor will be discussed during the March 13 power summit in Iloilo City.

 

Banias said among the proposals to address the problem is to rehabilitate Peco’ diesel-fired power plant and draw electricity from private generators.

 

“But it would take four months to rehabilitate Peco’s power plant and we have to inventory the amount of electricity we can get from private establishments,” Banias said.  

 

By Francis Allan L. Angelo

 

THE turnover of Panay Diesel-fired Power Plant (PDPP) in Dingle, Iloilo to SPC Power Corp. will go on as scheduled.

 

Presidential adviser for Western Visayas Raul Banias said the national government will not delay the March 26 turnover of the plant to SPC despite apprehensions that it will worsen the power crisis in Panay Island.

 

Banias said delaying the PDPP turnover is one of the proposals they presented to President Gloria Arroyo and the Department of Energy (DOE) to prevent the power shortage from deteriorating.

 

But Banias said Energy Secretary Angelo Reyes rejected the proposed solution as the sale was already consummated.

 

Reyes also disapproved the transfer of Power Barge 104 in Davao City as it is scheduled for maintenance and repair.

 

“Secretary Reyes instead pushed for power augmentation program which they expect to arrest the looming shortage,” Banias said.

 

The DOE will mount an energy summit with the National Power Corp. (Napocor), SPC and other power sector stakeholders in the island to discuss and solve the energy crisis.

 

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.

 

The Power Sector Assets and Liabilities Management Corp. (PSALM), which oversees the sale of government’s power assets, said SPC outbid two other firms after submitting the highest offer of $5.86 million for the two plants.

 

Atty. Conrad Tolentino, PSALM spokesman, allayed fears that SPC will not operate PDPP after March 26.

 

Tolentino said while there is no assurance from SPC, it is more logical for the firm to operate the plant so it can recoup its investments.

 

“SPC will lose more if it does not run PDPP,” Tolentino said over Bombo Radyo-Iloilo.

 

Tolentino also said that SPC must first seek the approval of the Energy Regulatory Commission before it can jack up prices of electricity. 

 

Energy industry sources said SPC is hesitant to operate PDPP because of the price of electricity.

 

SPC will only run the plant if electric cooperatives agree to pay for the real cost of power which is more expensive than Napocor’s subsidized rates.  

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.

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