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Energy Efficiency and Conservation Power and Transmission Development
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The different energy programs lined-up for implementation within the planning period opens a vast range of business opportunities for investors specifically in the fields of upstream oil, gas and coal, renewable energy, alternative fuels, power generation, rural electrification, downstream oil, natural gas industries and energy efficiency. In addition, the government has a program of fiscal and non-fiscal incentives to encourage the entry of investors in the energy sector. Considering the huge demand for fresh capital, active private sector participation and more public-private partnerships are targeted. Table 6.1 shows the sectoral investment requirements for the implementation of energy projects covering the period 2005-2014. Oil and Gas The oil and gas sector foresees renewed interest in the exploration,
development and production of petroleum resources in the country
following the Supreme Court's ruling on December 29, 2004 allowing
100 percent foreign ownership. Compared to previous years, there
was an immense influx of investments in 2005. For the first semester
alone, total actual investment in petroleum amounted to US$ 55.01
million. This upward trend is expected to continue in the succeeding
years. The launching of the PECR 2005, which also covered the geothermal
and coal sectors, is expected to further increase private sector
interest in the industry. Under the said contracting round that
ended in November 2005, four petroleum contract areas were offered
covering a total of 49,789 sq. kms. in shallow to deep waters located
near proven petroleum systems in Southwest Palawan, Sulu Sea basins
and vast frontier areas in East Palawan ranging in sizes from 10,000
to 13,500 sq. kms. Table 6.2 reveals that PhP 8.99 billion is allocated for onshore exploratory drilling by service contractors while PhP 48.14 billion is estimated for offshore location. On the other hand, the seismic acquisition program on 2D and 3D seismic data will entail investment of PhP 1.20 billion and PhP 3.25 billion, respectively. Meanwhile, development and production of domestic oil, gas and condensate will entail about PhP 384.03 billion. The private sector is expected to provide the huge capital requirement of the entire petroleum sector which amounts to PhP445.61 billion. Coal For the first semester of 2005, the COCs brought in PhP 2.88 billion
for the exploration, development and production of indigenous coal.
Table
6.3 shows the total investment requirements for the
coal sector for the entire planning period estimated at PhP 134.40
billion (Table 6.3). Of the said amount, PhP20.56 billion will be
used to develop potential areas in Luzon, PhP 51.43 billion for
Visayas and PhP 20.57 billion for Mindanao. In addition, the mine
investments, which include the capital outlay and operating cost,
would require PhP 41.84 billion. The DOE is actively promoting the use of indigenous and renewable
energy resources. Hence, for the entire planning period, the development
and promotion of these resources will continue with a total investment
requirement of PhP251.11 billion. Geothermal In 2005, PhP 2.23 billion was infused as a result of geothermal contracts for seven sites. In our effort to become a leading producer of geothermal energy, a total of PhP 87.37 billion in investments is required for the operation and optimization of explored geothermal areas including the exploration and development of potential sites all over the country (Table 6.4). Of this total amount, PhP 49.01 billion will come from the government and PhP 38.36 billion from the private sector. Table 6.4 outlines the investment requirements for the planning period. Projects in Luzon will entail about PhP 43.43 billion in which PhP 10.52 billion will be provided by the government and PhP 32.91 billion by the private sector. Further, the Visayas area will need PhP 25.40 billion, the breakdown of which is PhP 23.54 billion from the government and PhP 1.86 billion from the private sector. Lastly, the Mindanao area will require PhP 18.54 billion in capital investment with PhP 14.95 billion coming from the government sector and PhP 3.59 billion from the private investors. Meanwhile, the 11 areas offered for exploration, development and direct utilization in last year's contracting round are expected to boost investments in this sector. Hydropower The country can further tap the development of 43 potential hydropower sites with a total capacity of 572.9 MW. Activities related to this need PhP104.77 billion in capital investments over the entire planning period (Table 6.5). For Luzon, the capital requirement is PhP 49.52 billion, while Visayas and Mindanao need a capital infusion of PhP 25.35 billion and PhP 29.90 billion, respectively. Biomass, Solar and Wind
Total investments for coco-biodiesel production which amount to PhP 3.95 billion primarily include the investments of Chemrez, Inc. In the next five years, Chemrez has committed to upgrade its coco-biodiesel manufacturing facilities utilizing the highly advanced Lurgi High Efficiency Bio-diesel production process from Germany. In addition, three other private companies, namely: Atsun Corporation, Sun Valley and Mount Holly Coco Industries, have applied for a registration with the Securities and Exchange Commission (SEC) as an initial step to venture into coco-biodiesel production. Similarly, Romtron Corporation, a joint venture between Saint Vincent Ferrer Parish Multi-Purpose Cooperative, an NGO and the Local Government of the Municipality of Odiongan, Romblon through the initiative of DOST-PCIERD, has applied for accreditation as coco-biodiesel manufacturer. Investment opportunities in the coco-biodiesel sector include expansion and construction of coco-biodiesel facilities in Metro Manila and establishment of nationwide coco-biodiesel blend refueling stations. Energy Efficiency and Conservation Amidst soaring global oil prices, the energy sector is currently undertaking an aggressive campaign to promote energy efficiency and conservation. Towards this end, the DOE has lined up several activities which will require PhP 56.39 billion in capital investments (Table 6.8). Of this amount, PhP47.61 billion will be sourced from private investors while PhP 8.78 billion will come from the government. Activities on energy labeling and efficiency standards will constitute the biggest share at PhP 31.72 billion, followed by the energy management programs at PhP18.16 billion. Meanwhile, the continuing IEC campaign will entail PhP 2.86 billion. On the other hand, the government enercon program will need PhP2.82 billion while the voluntary agreement program will require PhP 840.40 million. Power and Transmission Development In line with the power sector's objective of providing reliable, adequate and quality supply of electricity in the main grid and small island grids and expanding rural electrification as well, infusion of investments from both the government and private sector of PhP 257.63- 261.95 billion is required. Main Grid on the DOE, NPC and TransCo demand forecast, the total investment requirements for power generation projects for the main grid are expected to reach PhP 227.92 - 232.24 billion for the entire planning period (Table 6.9). Of this amount, PhP56.65 billion will be infused for committed projects to be segregated as follows: PhP 7.51 billion for Luzon, PhP 29.93 billion for Visayas and PhP 19.21 billion for Mindanao. The required capital investment for indicative plants will be PhP 171.27 - 175.59 billion to be distributed as follows: for Luzon PhP 71.03 - 74.00 billion, for Visayas PhP 21.95 - 22.72 billion and for Mindanao, PhP 78.29 - 78.87 billion. The capital investment for transmission projects will amount to PhP 50.42 billion. Of this amount, about PhP 17.36 billion will be utilized for the Luzon grid, while PhP 17.41 billion and PhP 15.66 billion will be spent for the Visayas and Mindanao grids, respectively. This investment cost will include the expansion of subtransmission lines, transmission projects associated with generating plants and other projects required to comply with the N-1 reliability criterion. Small Island Grids Based on the Missionary Electrification Development Plan (MEDP)
2005-2009, the capital investment for the development of small island
grid's power requirements is estimated at PhP 25.24 billion. This
amount consists of operation and maintenance, capital and other
cost expenditures. Expanded Rural Electrification In attaining the government's target of 100 percent level barangay electrification by 2008, Table 6.10 shows that PhP 4.47 billion would be needed to finance the projects of the different implementing entities in 2,564 unenergized barangays in the country. Of this amount, PhP 1.76 billion will come from the private sector and the remaining amount of about PhP 2.72 billion will be borne by the government sector. For the year 2006, PhP 1.46 billion is required to energize 943 barangays, in 2007 PhP 1.68 billion will be utilized to energize 917 barangays, and finally in 2008, PhP 1.33 billion will be essential to realize the electrification of the remaining 704 unenergized barangays. Among the government agencies, NEA and the ECs will have the most number of barangays to energize while the balance will be shared among DOE, NPC-SPUG, PNOC-EDC and DAR. IPPs such as KEPCO, Mirant and Luzon Hydro and the PIOUs have also committed to implement barangay energization projects. The capital investments required for the downstream sector stand at PhP 332.32 billion for the entire planning period. Oil Total investment requirement for the downstream oil will entail about PhP 28.40 billion. Of this amount, the biggest share will go to liquefied fuel bulk marketing at PhP 9.55 billion while liquefied fuel retail marketing will need PhP 5.59 billion in capital investment. The LPG bulk marketing, terminalling and bunkering will necessitate a total funding of PhP 7.16 billion, PhP 4.28 billion and PhP 1.82, respectively. Specific plans are also underway for the relocation of oil depot facilities from Pandacan. Natural Gas The successful operation of the natural gas industry is largely dependent on the establishment of the infrastructure and related facilities needed in this sector totalling to PhP 303.92 billion for the entire planning period (Table 6.11). Of this amount, PhP17.49 billion will be allocated for the installation of transmission and distribution pipelines while for power generation, the estimated amount to be utilized is PhP141.68 billion. On the other hand, putting up of mother and daughter stations for the receipt and distribution of CNG for CNG-fed vehicles will need PhP 0.80 billion and PhP 2.21 billion, respectively. Meanwhile, the construction of LNG receiving terminals for bulk receipt and storage will require PhP116.54 billion and the purchase of CNG marine vessels to be used for the transport of CNG will cost PhP 25.20 billion. |