by Bernie Lopez
The news report read, "Brownouts in Luzon have already begun because the power generated by the hydroelectric plants has fallen." Instantly, I could smell a rat because hydro-energy in the Luzon grid is perhaps a fifth of total. Who is orchestrating this propaganda and why?
I called up a private-sector source to get a clearer picture for the general public. He agreed with me about smelling the same rat. Although the coal shortage was reported in passing the next day, still it was being downplayed for a reason. The discussion moved to Napocor as the suspect.
The notion of a coal shortage emerged in the first summer brownout this year. The Pagbilao coal plant was being 'rescued' with new sources of coal. Then coal supply from Masinloc was secretly being diverted to Sual, but it was too late, and so the brownout occurred. Part of the problem was Sual's pier could not handle big vessels, just barges. All this was hush-hush. Perhaps Napocor feared they would be blamed for the crisis and for mismanagement.
Although Napocor had a hand in the looming coal crisis, probably wrong management decisions, there are global forces that precipitated the coal shortage. Napocor had a supply contract from Australia. But noticing the high price, Napocor moved to China. But suddenly, China unilaterally abrogated its export commitments, for a reason. It needed the coal badly for its rapid economic boom. China's extreme appetite for not just coal but all types of energy was disrupting global supply. Napocor moved to Indonesia but it was too late. Prices climbed up to the high heavens.
The prices of energy, not just coal, started rising as far back as 2003. Supply was becoming tighter in oil and coal. Napocor had failures to get bid awards even before the move to Australia because of rising prices. Napocor was buying less and less at higher prices for a long period now. Napocor should not turn to secrecy. Transparency will make government and private sectors come to the rescue. The more they hide, they greater the blame on their management.
The problem in the Philippines is we have no nuclear energy alternative, so dependent on the more expensive oil and coal. We have five base power coal plants ('base' meaning operating 24 hours a day as opposed to hydro or wind energy) - Masinloc, Sual, Pagbilao, Semirara and Quezon, all Napocor managed except the Lopez's Quezon. All have capacities of about 500 megawatt each except Sual at 1,000. Total capacity is then about 3,500 to 4,000 megawatts.
Yet all of them are operating way below capacity because of the coal crunch, especially the biggest, Sual, operating now at less than half of capacity. Quezon is able to buy 75,000 metric tons a months, because it has a pier for large vessels and because it has a better credit name in the international market. But Meralco announced recently it was buying more energy from Napocor, hinting that even its affiliate Quezon coal plant may be delivering less power now.
My source says there are three reasons for the looming crisis in the Luzon grid - anitquated transmission lines, the coal and energy crunch, and Napocor mismanagement. My source is complaining why Napocor, to momentarily solve the problem, does not revive the many idle privately-owned diesel plants which were built during the Ramos era to solve the energy crisis.
The image of Napocor as a milking cow is an old story, but it keeps coming back when we get an energy crisis. Napocor had an outstanding debt of a whopping P1.3 trillion, enhancing its milking cow image, but the current new management reversed that. Napocor's liquidity improved because it was able to collect P35 billion a year from a one peso rate increase since 2004. With better finances, Napocor should be able to buy coal, that is, if the cow is no longer being milked.
It must be clarified that Malacanang is on top of energy purchases. In other countries, it is the government that rakes it in in terms of energy taxes, but here, my source says ‘taxes’ go to individuals in government rather than the government itself.
Napocor supplies 80% of nationwide energy needs. Napocor-owned plants supply 28% of the 80%. TRANSCO should not be the scapegoat in the looming crisis because they simply distribute power. The problem is, there is no power to distribute.
Right now, we do not have a 'forward position' in coal supply and we, like the jeepney drivers, depend on daily inflows. Before it was 'isang kahig isang tuka' (one scratch one bite) but now it is 'dalawang kahig isang tuka' (two scratches one bite). As usual, we operate by hind sight. We will address the crisis now because it is there. We were never proactive in energy sourcing since time immemorial, in spite of the many warnings from experts that by 2010, we will have huge energy gaps. It is only 2007 now.
We need nuclear energy badly, not considering environmental cost. All industrialized countries have nuclear energy. We cannot be enslaved to expensive imported coal and oil alone. Our hydros need to be expanded. We need new alternative sources of energy not now but yesterday. And it seems the crisis has fallen on the lap of a green horn. Poor Angie Reyes.
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