TransCo withdraws bid to interconnect power grids

NATIONAL Transmission Corp. (TransCo) will no longer vie to control the project to control the interconnection of the Visayas and Mindanao power transmission grids to avoid further delay, Energy officials said.

“That plan is no longer in effect,” Alfonso G. Cusi, secretary of the Department of Energy (DoE), told reporters about TransCo’s bid to handle the project, which its proponent — privately held National Grid Corp. of the Philippines (NGCP) — expects to cost around P52 billion.

“It’s NGCP,” he said, when asked about which entity will be overseeing the project that has been delayed for years.

“The project will be further delayed if we order it stopped,” he said, referring to halting the project to give way for TransCo’s entry.

He said TransCo sought to participate in the interconnection project because NGCP as the project’s implementing entity would pass on the cost to consumers.

“Aside from capital cost the NGCP requires a return on its investment. The cost of money may (have) a margin. Put these together, these will all be recovered from consumers,” Mr. Cusi said.

Melvin A. Matibag, TransCo president and chief executive officer, confirmed giving up plans to take over the project. He said, however, that TransCo offered “informally” to facilitate the financing for the project because of a funding offer from the World Bank.

TransCo, an agency attached to the DoE, has studied the Malampaya fund as the possible funding source should it handle the project. The fund is made up of royalties that the government collected since 2002 from the Malampaya gas-to-power project in Palawan.

In September, the Energy Regulatory Commission (ERC) announced that it had granted provisional authority to NGCP to implement the interconnection for P51.6967 billion. It said the project would enable power supply transfers among the Luzon, Visayas, and Mindanao grids.

The project covers the linking of the power grids via Cebu and Dipolog City in Mindanao. The converter stations in the Visayas and Mindanao will be located in Sibonga, Cebu and Aurora, Zamboanga del Sur, respectively.

With interconnected grids, the deficiency of supply in Visayas may be supplied by importing power from Luzon or Mindanao. The project will also help optimize the available power supply in the Philippine grid.

The ERC’s provisional authority was issued under its order dated July 11, 2017. It said the project is in support of the government’s vision to link the country’s major grids into a single national grid.

Republic Act No. 9511 granted NGCP in 2008 its franchise to engage in the business of conveying or transmitting electricity through a high-voltage backbone system of interconnected transmission lines, substations and related facilities.

NGCP’s franchise is authorized by RA 9136 in 2001 or the Electric Power Industry Reform Act of 2001, which paved the way for the sale of government energy assets. The law separated the various components of the sector, including power transmission, which was spun off to TransCo ahead of its turnover to the private sector through concession.

Unlike outright sale, the concession agreement allowed the government to keep ownership of the transmission assets through TransCo. The operation, maintenance and expansion of the grid was handed over to NGCP.

Reference:

Saulon, V. V. (April 19, 2018).  TransCo withdraws bid to interconnect power grids. Business World. Retrieved from http://bworldonline.com/transco-withdraws-bid-to-interconnect-power-grids/

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