Archive for the ‘Tiwi’ Category

The Proposed Libmanan Power Plant, Bicol’s Power Situation And Some Lessons

November 22, 2008

Last September 4, on her visit to Libmanan, Camarines Sur, Gloria Macapagal Arroyo announced the proposed $28M Libmanan Biomass Power Plant (BPP). The proposed BPP is supposed to produced 10 MW. The government’s line is that it will help improve power supply in Libmanan and in Camarines Sur.

However, my understanding of the power situation in Bicol is that the power produced by the Tiwi and Bacon-Manito (Bac-Man) Geothermal Power Plants are well over the requirement of the entire Bicol peninsula. In fact, there is a proposal that the power to be produced from an incoming phase of the Bac-Man project, the Bacman-Kayabon project be reserved for the Bicol peninsula. It is estimated that its 40MW production should be sufficient to serve the current 30MW need of the Bicol peninsula.

It is not clear, however, how will the Bicol peninsula will be separated from the Luzon electricity distribution grid. The high system loss is the biggest reason for the high electricity rates in the region. This is ironic since the power it consumes come from region itself. And it is doubly ironic since the power is first sent out to Metro Manila (because they say it is too much for Bicol) and it is the return current which Bicol uses, causing low voltage and power fluctuation.

What they are not telling is Mega Manila is supplied ahead of Bicol because it is where the industries are located, it is the national center and it has a higher population base. It also produces half of the country’s GNP as compared to Bicol’s minuscule contribution. Talk about second-class treatment.

But this is just another manifestation of the regalian doctrine at work–that all natural resources belong to the national government and that they will decide as they see fit. It doesn’t matter to them that Bicol shares the cost of bringing the power to Mega Manila by paying the distribution cost the TransCo (National Transmission) charges for the whole Luzon grid including then inherent system losses.

An additional obstacle to the separation from the Luzon grid is that it is no longer solely an intra-government matter. The Bac-Man Geothermal Power Plant is already controlled by the Lopez group. Sell the electric cooperatives to Meralco? Well, there are precedents. Rizal, Bulacan, Pampanga, Cavite and portions of Laguna, Batangas and Quezon became service areas of Meralco because of the people’s demand who got fed up with the inefficient service and high charges of their old electric cooperatives.

Will the Libmanan BPP’s power production be separate from the Luzon power grid? The leaders of Bicol and the people should get together and resolve the problems mentioned above. This should not just be left to government functionaries.

Actually the idea of a separate grid (or maybe use the old grid and just pay for the cost of carrying the electricity) is a step in the right direction. If Bicol will study the experience of Iligan City, it might learn a lesson or two. When we arrived in Iligan, we were surprised that the rates there were only half of Manila’s. When we asked why, the answer we got was that there was an agreement that the power the Maria Cristina Hydroelectric Power Plant, which is located in Iligan, will be sold cheaply to the city. We even heard a story that Iligan is not charged the usual distribution costs (since anyway the plant is only a few kilometers from the city).

This might have basis since people of Lanao del Sur and two Muslim towns of Lanao del Norte are also clamoring for preferential treatment like Iligan. They cite that the water Maria Cristina uses comes from their lake which they consider part of their ancestral domain, the Lake Lanao. Further, they point out that most of the generators anyway and the water cataracts are located in their areas. This refused demand has caused several bombings of the towers of the power grid of Mindanao.

With low electricity rates, many industries especially those that are big consumers of electricity came to Iligan. Iligan experienced an industrial boom in the ’50s to the ’70s making it the Highly Industrialized City it is now. Even the famed National Steel Corporation came to Iligan.

This is the lesson that Tiwi, Bacon and Manito missed. But I hope it is not yet too late for Libmanan.

Aboitiz is Coming To Bicol

November 4, 2008

Recently, PSALM (Power Sector Assets & Liabilities Management Corp.), the arm of the Philippine government in the privatization of its power-generation facilities, bid out the Tiwi and Mak-Bak (Makiling-Banahaw) geothermal power plants.  The power firm Abolitiz Power Corporation (APC) won the bidding by submitting the highest bid of $446.88M for the two geothermal plants, beating the Lopez-controlled First Luzon Geothermal Energy Corporation’s bid by nearly $80M.  

The Tiwi Geothermal Plant has an installed production capacity of 289 megawatts (MW)  and it is the first geothermal power plant in Bicol.  It is situated on the northeast corner of Mount Malinao, an active volcano, and its turbines are located in the barrio of Cale, in the town of Tiwi, the northwesternmost town of Albay.  Bicol’s other geothermal plant is the Bacon-Manito Geothermal Plant which is located on the boundary of Albay and Sorsogon between the former town of Bacon in Sorsogon and the southeasternmost town of Albay which is Manito.  It is situated on the Pocdol volcanic range which divides Sorsogon from Albay.

Aboitiz Power Corporation’s buy-out of the Philippine government’s stake in the Tiwi Geothermal Plant marks the entry of the Aboitiz group, which is based in Cebu, to Bicol.  The Aboitiz group has been on the foray lately in acquiring power plants all over the Philippines, marking its shift in its core business focus.  To fuel this shift, their holding company, the Aboitiz Equity Ventures (AEV)  recently sold Aboitiz Transport System (ATS)  lock, stock and barrel to a Netherlands-based Kuwaiti group for $100M.  ATS controls the country’s biggest shipping company, the SuperFerry and it also controls SuperCat, Cebu Ferries and the express courier company 2GO.  

The Aboitiz group has long been in the power business.  It could be said that it is the Meralco of the South (the Visayas-Mindanao areas) though it would probably resent the term.  AEV controls the electricity distribution companies in the metropolitan areas of Cebu, Davao, Cagayan de Oro and Iligan.

As with new entries in the region, Bicol will again hope that the group will contribute to the development of Bicol and not just take profits out.  The Aboitiz group certain can, if it can be persuaded.  It certainly has the capability having presence in banking (Union Bank),  food (flour manufacturing), marine (shipbuilding, maintenance and management), real estate, construction, transportation aside from power (generation and distribution).