The government and a big player in the power industry attempted to replay an old script. Fortunately, the people of Mindanao didn’t buy it.
The Mindanao power-supply issue that has grabbed media limelight and has spurred public discussions over the past few weeks, is nothing but a drama. It was the biggest box-office flop of the year.
When President Aquino attended the Mindanao Power Summit that was called to discuss solutions to the power-supply shortfall that caused rotating blackouts in some parts of the island, he declared: “The simple truth is you will have to pay more … There are only two choices—pay a little more for energy, or live with the rotating brownouts.”
No, it wasn’t a story of “he came, he saw, he conquered.” Rather, it was a story of “the President came, declared a debatable truth, and got the ire of the people.” Then, the plot thickened.
Epira
The Electric Power Industry Reform Act (Epira) is the problem behind the Mindanao power-supply shortfall. This law was designed for big business interests, not for public service. Before Epira was passed, National Power Corp. (Napocor) was responsible for generating electricity and developing transmission lines.
But Epira removed this fundamental role of the state. What Epira did was to pave the way for private investors to come in and chart the course of generating electricity in our country. The matter of developing power supply and management has been left to the private sector, an oligopoly.
Shielded from risk
After more than 10 years under Epira, the government provided few big firms practically every incentive to shield them from major risks and allowed them to practice market abuse. These big corporate interests hardly contributed to increasing power-generation capacity.
The Department of Energy (DOE) simply surrendered its mandate to private initiative. Through cross-ownership of generation and distribution components of the industry and high-level rent-seeking practices, these elites managed to impose high electricity rates—now the highest in Asia—and extract superprofits at the expense of our consuming public, our industries and small distribution units like rural electric cooperatives.
Reasons
Since 2009, the supply shortage has been repeatedly felt in Mindanao every summer and yet, the DOE ignored the need to develop additional capacity for baseload and peaking plants. Why?
Instead of rehabilitating Agus and Pulangi hydroelectric power plants, they were allowed to deteriorate. These power plants were never harnessed to full capacity and developed further, and the main resource of these two great rivers, Lake Lanao, was not nurtured.
While DOE claims that it put up coal-fired power plants in anticipation of shortages, it takes three years before they become operational. These projects cannot be an immediate solution to the problem. More importantly, they are not climate-friendly.
Napocor power barges are continually being privatized, leaving the government without reserve capacity to deploy in times of need.
Old scenario
To entice investors to come in, power players recreated an old scenario. It was timed when people were about to go on vacation leave before the Holy Week.
They conditioned the minds of the people that because of the dry season, power shortages were bound to happen. Rotational blackouts did appear, affecting mostly those in the western part of the island. Then, they presented a solution—additional but expensive electricity (P14 per kilowatt-hour) from privatized power barges.
Electric cooperatives on the island refused to purchase power from these private firms, stressing that electricity rates would surely shoot up at the expense of the consumers. More rotational blackouts occurred.
Coops blamed
DOE officials, in turn, blamed the cooperatives for the daily power interruptions across Mindanao.
Some legislators and proponents of Epira said the comparatively low generation cost in Mindanao was not a competitive price and therefore there was a need to increase its generation rates. Why would Mindanaoans agree to this argument?
In September 2010, the average production cost (excluding depreciation) of Agus-Pulangi was only 21.34 centavos per kWh as compared to Iligan Diesel Power plant’s P7.791 per kWh and Power Barge 104’s P7.337 per kWh. In the same period, the total net operating revenue of the seven hydro-electric power plants of Agus and Pulangi reached P6.85 billion.
Solutions
To immediately address the so-called power crisis in Mindanao, government must upgrade the Agus and Pulangi hydrocomplexes, dredge silt and implement watershed reforestation and development projects to sustain water flow.
It also must change its attitude toward privatization and maintain the ownership of remaining generation assets. It must be transparent and provide the people with all declared generating capacity in Mindanao to guide them about the real status of the baseload requirements.
To spur economic development, the government must give utmost importance to subsidizing the electricity used by the poorest of the poor and to maintaining access to the Agus and Pulangi plants, sources of cheap and clean energy.
The crisis must be turned into an opportunity toward genuine development through a reinvigorated sense of ownership and commitment to pursue a just transition to sustainable energy development.
(Lucita Gonzales is the secretary general of the Freedom from Debt Coalition-Western Mindanao chapter.)