Senator wants hydro complexes state-owned, professionally run

Date issued: April 17, 2017

THE Senate energy committee prefers keeping the Agus-Pulangi hydroelectric power facilities in Mindanao in government hands, but with professional management from the private sector installed.

“If ever, the Senate will keep Agus-Pulangi in the portfolio of government gencos (power generation companies),” said Sherwin T. Gatchalian, chairman of the Senate committee on energy in a recent interview.

The Agus hydro power asset has an installed capacity of at least 700 megawatts (MW). The biggest plant in the complex is the 200-MW Agus VI in Iligan City, which has five operating units, two of which have a capacity of 25 MW each and the rest with 50 MW each.

The Pulangi hydroelectric power plant in Maramag, Bukidnon has three units, each with an installed capacity of 85 MW. The power generation facilities are considered Mindanao’s crown jewels.

“My personal proposal is to create a new company, [and] move the assets of Agus-Pulangi in that new company,” Mr. Gatchalian said.

“That company will operate as a GOCC (government-owned or -controlled corporation), but managed professionally,” he said.

“We can privatize the operation and maintenance, but the asset is owned by the government. What’s important here is that asset should be managed professionally,” he said.

He said his preference for private managers was because “government-style management... is prone to corruption.”

“It’s prone to inefficiency. So it has to compete just like any other power plant. It cannot rely on subsidies or incentives; it has to operate like any private genco,” he said.

The privatization of the Agus-Pulangi complex is a sensitive issue in Mindanao, where power rates remain low because of these plants’ cheap output. The Department of Finance has called for the sale of power assets that are still with the Power Sector Assets and Liabilities Management Corp. (PSALM) within three years.

Privatization is required under Republic Act No. 9136 or the Electric Power Industry Reform Act (EPIRA) of 2001, the law that restructured the power industry. EPIRA created PSALM to take ownership of disposable power assets.

Under EPIRA, the sale of Agus-Pulangi should be no earlier than 10 years from the effective date of the law in 2001. It prohibits schemes such as build-operate-transfer, build-rehabilitate-operate-transfer and other variations.

Mr. Gatchalian’s comments come after the House of Representatives last month approved a bill creating the Mindanao Power Corp.

The House bill seeks the non-privatization of the Agus and Pulangui hydropower facilities. It also pushes for a viable way for the government to operate and maintain the affordable power sources.

Asked about a proposal that will restrict the use of the facilities’ revenues to Mindanao, he said: “That can’t be.”

“The subsidies being given to the SPUG (small power utilities group) areas come from all of us,” he said, referring to areas in the Philippines that are not linked to the interconnected electricity grids in Luzon and the Visayas, and the separate grid in Mindanao.

“The subsidies being given by the entire country go anywhere that needs it,” he added. “I think we have to be fair because people in Luzon and Visayas are also subsidizing.” -- Victor V. Saulon

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