DOE backs Visayas-Mindanao grid connection project at govt’s expense

By  Lenie Lectura – May 1, 2017

from Business Mirror

The Department of Energy (DOE) has backed a proposal of the National Transmission Corp. (Transco) for the government to undertake a multibillion-peso Visayas-Mindanao grid connection project.

“I agree. It should be the government, so that the cost would no longer be passed on to the consumers,” Energy Secretary Alfonso G. Cusi said.

He said ongoing studies on how the project would be financed, as well as the technical issues involved, would be finalized within the second quarter. Thereafter, Cusi said, Transco would have a more concrete plan on how best to carry out the project.

The National Grid Corp. of the Philippines (NGCP) earlier said it could complete the interconnection project by 2020 at a cost of P52 billion, Cusi added.

NGCP won a 25-year concession to run the country’s transmission network. It has completed the hydrographic survey determining the viable location for the Visayas-Mindanao grid interconnection project, which is along the country’s western seaboard, from Cebu all the way to Dipolog.

Transco President Melvin Matibag has proposed to tap the Malampaya fund to finance the project construction so that consumers would not be burdened to pay for it.

“We will justify why it should be Transco, instead of NGCP, that must undertake the project,” Matibag said. “That  [P52 billion] will be an additional cost to the consumer. Baka matapos na iyung concession, ’di pa nabayaran ’yung P52 billion. If Transco will build the interconnection project, there will no longer be a pass-on cost to consumers, since funding will be sourced from the Malampaya fund.”

The balance of Malampaya fund reached P235.662 billion as of 2016, according to the DOE.

The government’s share from the energy resource development fund, commonly known as the Malampaya fund, reached P13.43 billion in 2016, slightly lower than the P14.32 billion recorded a year earlier, with some P5,374,201,272.14 allocated as “source of assistance to LGU [local government unit], while the net share of the national government stood at P8,061,301,906.79.”

In 2015  the  total  government  share amounted P14,320,625,845.66. Of the total amount, LGU assistance stood at P5,728,250,338.82, while the remaining net national government share reached P8,592,375,506.84.

Sen. Sherwin T. Gatchalian, for his part, said the use of the Malamapaya fund is “very specific”. It is possible, however, that the said funds can be used for other purposes.

“We’re looking at passing a law to clear it up, because there are a number of interpretations on the use of Malampaya fund,” Gatchalian said.

In February NGCP made public the result of a study that will interconnect the Visayas and Mindanao grids.

In an NGCP-commissioned hydrographic survey conducted from September to November 2016, it was determined that the most viable route for interconnecting the Visayas and Mindanao grids was along the country’s western seaboard.

The project is envisioned to be finished by 2020, assuming all regulatory approvals are secured on time.

With the hydrographic survey result, NGCP will now proceed with the preparation of a conceptual design, detailed cost estimate and update of system simulation study using the Cebu-Dipolog route.

“We need the support of the government, the Energy Regulatory Commission, the Department of Environment and Natural Resources and the different local government units the project will traverse, among others, to push this forward. With their full support, we are confident that we will be able to complete this project on time,” stated the company.