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Fleecing the Malampaya Fund

/ 05:47 AM March 17, 2015

From the same folks who lie and constantly con us by rechanneling funds across departments, the falsehoods and the fleecing continue unabated.

Within a few days those massive and debilitating power outages officials warned us against—which found an aggressive call for crisis powers that would, among others, siphon off funds—should be upon us. It’s understandable. Government has done little in the last four years to increase capacities.

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Unfortunately, the impending crisis may be nothing more than a “Chicken Little” spin that has the adverse possibility of being a self-fulfilling threat.

It is not about a massive deficiency in generating capacity as the public was initially led to believe. It is not a result of baseload shortages. It is not due to an inadequacy in the interruptible load program (ILP) that saved Cebu from similar energy challenges. In fact, one senator recently discovered over 300 megawatts (MW) of unutilized capacity under the noses of the energy bureaucracy.

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It is about a totally controllable event—scheduled maintenance.

Indulge us our dirty little minds. Rather than an emergency, what we might have, in reality, is a state-instigated campaign stirred and stoked in preparation for 2016.

Current officials fear an incoming administration might eventually prosecute them for criminal complicity in a growing number of cases. These guys, through sheer incompetence, keep on getting into a pickle. To preempt and protect bellowing buttocks from criminal indictments flooding in once immunities are stripped in 2016, officials will want to fill campaign coffers and fatten for a possibly long winter sojourn.

That’s understandable. No ranking official has yet seen the insides of a real prison cell. One way to prevent such is to create a crisis that also unlocks dormant funds.

Originally set up to develop indigenous energy sources, the Malampaya Fund has already been malversed to purchase industrial peace when, once, militant jeepney drivers threatened to strike. The fund was also used to purchase war material and stop-gap diesel-fired generators. None of these fall under the strict definition of “energy development.”

Now congressmen want to dip into the fund to pay for the ILP. But analyze the so-called crisis.

Officials raised the apocalyptic specter of brownouts running for five consecutive days. However, in hearings conducted from Oct. 19, 2014 through Nov. 18, 2014, they eventually admitted that the “looming energy crisis” that could result in “massive systemwide rolling blackouts” would, in reality, be simply a slight shearing off in grid code mandated reserves during either one of the Luzon grid’s daily two peak periods.

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In other words, should existing generating capacity operate in full during a demand peak, the requisite reserves would simply fall below the minimum level set in the grid code. The Grid code requires a spinning reserve equal to the highest producing unit within a grid and a balancing Frequency Regulating Reserve (FRR) dependent on the actual demand within specific operating hours. The first backs up a generator, the second, simply regulates. Both do not supply actual demand. For the former, this is approximately 600 MW. For the latter, 340 MW. Technically the latter can fit within the former. Spinning reserves can doubly serve as an FRR unit.

Sworn testimony by industry experts revealed that any shortfall, should they occur, would only be 31 MW. Unless larger shortages are contrived, that translates to one-hour brownouts between 10 in the morning and 3 in the afternoon, once a week from mid-March to April. Now factor-in the over 200 MW of unutilized capacities available for the ILP. Suddenly the 31-MW reserve shortfall vanishes.

Would a reserve shear automatically produce “massive systemwide blackouts”? Will we have the debilitating 8- to 12-hour brownouts that characterized the Corazon Aquino administration and resulted in onerous “take-or-pay” power agreements? No to both.

Maintenance schedules can be managed. The one-hour, once-a-week reserve constraint will be due to the scheduled maintenance of the Malampaya gas fields curiously ill-timed when hydroelectric sources are seasonally low. Last year, maintenance was scheduled in November. That reduced the impact of reserve shearing.

Managing maintenance schedules and consequently reserve capacities is within the powers of government’s energy hierarchy.

Unless of course officials convolute the question to pry open, dip into and fleece specialized fund sources.

The Malampaya Fund is not a personal piggy bank. Politicians should keep their dirty hocks away from it. Unless of course, the foreboding inevitabilities of 2016 loom and threaten their status quo. Then, for crooks, as well as the criminally complicit, the power crisis spins and the opportunities for fund raising, indeed, become desperate political imperatives.

Dean dela Paz is a former investment banker and a consultant to the Joint Congressional Power Commission. He authored a book on energy governance tool kits and teaches finance, investment mathematics and corporate strategy.

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TAGS: 2016 Elections, energy crisis, Malampaya Fund, power crisis
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