Energy woes: The PHL faces a dark future By Val A. Villanueva -...

Energy woes: The PHL faces a dark future

By
Val A. Villanueva
-
September 27, 2018​

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With soaring inflation and a wobbly economic footing partly brought about by soaring oil prices, the administration of President Duterte is still dragging its feet to find cheaper and clean alternative sources, although some of them are ready and able at short notice.
It doesn’t take a genius to figure out how badly we need to come up with quick solutions to meet the projected depletion of power, which could further pull down economic growth. Records show that the country’s current dependable power reserve is very low, between 5 percent and 10 percent only. Compared with other Asian countries, Singapore has at least 50 percent reserve. The Department of Energy (DOE) forecasts we will need 43,765 megawatts of additional power capacity by 2040, up from the existing capacity of 13,877 MW, representing a compound growth rate of 6 percent yearly. The Luzon grid, which accounts for 70 percent of the current capacity, is expected to triple from 9,726 MW to 29,852 MW by 2040, a growth rate of 5 percent per annum. The Malampaya Natural Gas is also fast depleting.
That there is an urgent need to build more power plants is an understatement. Although the newly commissioned 420-MW Pagbilao plant in Quezon province has been recently put onstream, the gaping need for power is still worrisome. The Pagbilao plant alone cannot be expected to fill the country’s energy needs.
Why another energy project in Pagbilao, Quezon—the Liquified Natural Gas Hub Receiving Terminal which is a 650-MW combined cycle gas-fired power plant—has been unable to get the nod to tap into the existing power grid has been a mystery to its proponent, the Australian-based Energy World Corp. EWC’s liquefied natural gas terminal is now 90 percent complete, and is set to become a hub of LNG distribution around the country once it becomes fully operational. The problem is that it has not yet been allowed to tap into the government’s distribution grid.
EWC got the green light from the Energy Regulatory Commission to create a point-to-point transmission facility to connect its 650-MW combined cycle gas plant to the power grid. The government regulatory agency allowed the power company to develop the P694-million transmission facility to connect its power plant to the New Pagbilao Station of the National Grid Corp. of the Philippines.
Sources say that unknown and mysterious forces are preventing the company from proceeding with the project. The DOE, National Grid Corp. of the Philippines, the National Transmission Corp. and the Grid Management Committee have yet to act on EWC’s request to tap on the distribution grid, despite its strict compliance with the Department of Environment and Natural Resources’s clean-energy policy directives. As mandated by the DENR, EWC is not allowed to enter into long-term power purchase agreements, but instead must ensure that all power will be sold through the Wholesale Electricity Spot Market (WESM), with the Development Bank of the Philippines and Land Bank of the Philippines to be given the opportunity to invest in, finance and profit from the project. This has prompted former Quezon Governor Eduardo Rodriguez, whose concern for the economic progress of his province did not end with his term, to make a last-ditch appeal to the national government to finally allow the operation of the LNG hub terminal and power plant facilities.
Rodriguez lamented that, while the country now suffers from energy problems, EWC is being deprived of its right to take off, and supply cheaper and cleaner electricity. Funding requirements with local banks and transmission arrangement with various government agencies have been cited as the main cause of delay in the formal operation of the facilities of the power plant project, he said.
EWC is developing the first LNG Hub Terminal with full containment and onshore LNG tanks with pumpable capacity of 130,000 cubic meters of LNG each. The plant also consists of a dedicated jetty and marine infrastructure for the loading and unloading of LNG ships, as well as regasification, control center and workshops and other ancillary facilities. Adjacent to the Hub Terminal facility, EWC is also constructing the first LNG Fired Combined Cycle Gas Turbine Power Station with a capacity of 650 MW aimed at providing clean electricity, which will be sold through WESM to the Luzon Grid in line with the DOE’s vision for clean energy in the future.
Rodriguez explained that, once the LNG-fired power plant and the hub terminal become operational, the produced gas can also be converted from LNG to CNG (compressed natural gas) that can be used by the transport sector.
“Cheaper fuel would mean cheaper amount of the basic commodities. Second, the amount of a CNG tank will be 20 percent cheaper than an LPG tank commonly used by households,” said Rodriguez, adding that its domino effect would be favorable to the Filipinos, especially now that the country is facing high inflation rate.
There’s so much at stake! The Duterte administration should act fast to solve the country’s economic woes, partly caused by the upward spiral of world crude oil prices to $70 per barrel last week. This has nudged up the inflation rate, and this rise is not expected to slide down until the end of this year. The bulk of the 6.4-percent inflation rate average last month was due to the sequential weeks of price increases in gasoline, diesel and other oil products.
No doubt, the EWC is a strategically important asset for the Philippines’ nascent gas industry. It will be able to handle up to 3 million third party-access tons per annum of LNG. Sadly, recent developments point out that vested interest of powerful families entrenched in the power business has created a big stumbling block in the country’s search for cheaper and clean alternative sources.



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