DOE Press Statement 22 March 2012 on Mindanao Power Situation

In response to the news articles stating the “inaction” of the Department of Energy on the Mindanao Power Situation, we would like to note that on 22 February 2012, the Department of Energy (DOE) initiated the dialogue through the House of Representatives’ Committee on Energy so that the legislators will be apprised of the real situation in Mindanao.

Contrary to the allegation of inaction, the DOE has consistently taken measures to address the emerging concerns of Mindanao:

1. Dredging of Pulangui River

We have presented to the Joint Congressional Power Commission the cost and effects of dredging the Pulangui River. To set the record straight, it is impractical for the government to do an overall dredging and it is best that a selective dredging and flushing be implemented.  The surrounding watershed areas of the river are already denuded. The government has already released P3 Billion for the reforestation of the surrounding areas but this will require time. We emphasize that dredging now will not solve the problem because it will just give more space for silt to accumulate. It is also important to note that the Pulangui plant’s capacity will not be as stable, considering that it is run-of-river and remains dependent on the amount of rainfall and flow of water.

2. Repair and transfer of the Power Barges (PB) 101, 102, and 103

A National Power Corporation 2010 study showed that the move of PB to Mindanao will require P740 million. We emphasize that operating these plants will also require its upgrade because of the condition of the PB. Under the Electric Power Industry Reform Act (EPIRA) of 2001, government is constrained to engage in power projects. In privatizing these PB, the Power Sector Assets and Liabilities Management Corporation have included in the terms of reference the requirement to transfer the same to the Mindanao region upon awarding.
3. Operation of the Iligan Diesel Power Plant (IDPP)

On 18 January 2012, City of Iligan informed the Commission on Audit (COA) of the disposal of the IDPP and sought the approval of the sale to Conal Holdings Corporation. The DOE has not been remiss in monitoring the review of said sale without infringing on the review of the audit.  The matter remains pending with COA and we recognize COA’s independence as a constitutional body with its own regulatory requirements.

Moving forward, the DOE has issued a Circular aimed at rationalizing the Mindanao Grid power supply system. This is a stopgap measure that will give relief to the people in the region.

The long-term solution for Mindanao is the installation of baseload generation that will give the region supply reliability and affordability as its demand also grows. This will only happen if contracts are closed, otherwise no investor will risk a project.

Rest assured that the DOE is committed to attract investors to the Mindanao power portfolio. Thus, we urge the Mindanao legislators, local government and consumers to extend their utmost cooperation with the national government in addressing the power situation in Mindanao.