NGCP sets catch-up plan on COVID-stalled projects

By Myrna M. Velasco – June 13, 2020, 10:00 PM
from Manila Bulletin

Private transmission firm National Grid Corporation of the Philippines (NGCP) is currently preparing and will submit to the Department of Energy (DOE) its catch-up plan on projects that had been affected and stalled during the coronavirus-linked lockdown in the country.

“We’re assessing how bad we’re delayed. Once we get some form of clarity, we’ll make a report,” NGCP Spokesperson Cynthia Alabanza said, with her emphasizing that even without the DOE requiring it, the company will submit a catch-up plan on how they will proceed gradually on their project-constructions even as the pandemic still lingers.

She qualified the company “exerted so many efforts even after the declaration of the ECQ (enhanced community quarantine) in March 16, but there were developments beyond our control that warranted work stoppage on ongoing projects.”

NGCP, according to her, sent more than 165 letters to different local government units (LGUs) in various parts of the country, but permitting on work continuation still served as a hurdle – especially so since the LGUs had been designated to take the frontlines in the country’s bid to stem the spread of the coronavirus.

Alabanza further noted that in some projects, mobilization of resources as well as deployment and travel of contractors had likewise been impeded during the ECQ and modified ECQ periods in many parts of the country.

By far, even Energy Secretary Alfonso G. Cusi is anticipating further delays in the implementation and completion of power projects because of the COVID-19 lockdown – and such could be aggravated by prospective roadblocks on targeted flow of fresh capital in the energy sector.

This early, the energy chief said “there are delays in our power plant construction projects due to movement restriction, delayed deliveries of materials and other necessary components.”
Compounding that dilemma, Cusi said, is the “inability of foreign contractors to fly into the country due to the suspension of domestic and international travels.”

There are already power plant facilities of which completion and commercial commissioning had been deferred due to the health crisis; and it is similarly affecting the transmission projects of NGCP; as well as the expansion, repair and reinforcement works of power distribution utilities.

And what he sounded off as a more alarming precept would be “possible deferment of energy projects due to low oil prices and a possible scenario of gradual economic recovery despite macroeconomic effects.”

Under the Duterte administration, invitation for oil and gas exploration in the country has been stepped up; but with the collapse of global oil prices with no certainty yet for rapid recovery, Cusi noted that investors will likely shift ground and may just hold off any investment plans.

In the power sector, investment trepidation may even turn out more menacing – latching on the fact that there are no new committed major power projects at this time; and players in the sector are also facing grim scenario of cash flow constraints in the coming months due to government-enforced deferment of collections.

A power plant project – primarily those of baseload and even mid-merit capacity – would need 3-4 years of gestation period before they could reach construction completion and commercial commissioning.
The bigger problem now is enticing new power plant projects that will seriously advance to implementation phase before the end of this administration to ensure that its legacy will not be a new round of power crisis.

Even Cusi is realistic enough to admit that it will be tougher investment decision for project sponsors to deal with at this point because of the economic impact that the lingering health crisis had effected not just on the operations of the energy firms but on the Philippine economy as a whole.

And while the country paces for economic recovery, energy will be its most important backbone to underpin gross domestic product (GDP) growth targets moving forward.