Power sector stakeholders are sounding the alarm on another power supply shortage in the future.
Senate committee on energy chairman Sherwin Gatchalian said government must decide if it will take over the operations of the Malampaya gas field whose contract will expire by 2024 or conduct another bidding for a private sector to run the facility.
“The contract will end by 2024, everything will revert back to the government. Meaning, the Filipino people will enjoy all the revenues and profit coming out of Malampaya. On the other side of that, government will be operating the gas field,” Gatchalian said in a virtual forum hosted by the Management Association of the Philippines yesterday.
“This is a decision that government needs to make and (to) analyze because government by itself has a lot of constraints in terms of operation but the basic principle here is if ever government decides to get an operator, it has to bid it out. That’s the only way for us to get the best price, get the best operator and get the best option, Gatchalian added.
Malampaya supplies around 40 percent of Luzon’s power needs for natural gas power plants. While its service contract is set to expire in 2024, the field’s fuel reserves are projected to be completely exhausted by the first quarter of 2027.
In the same forum, Manila Electric Co. (Meralco) president and chief executive officer Ray Espinosa said government should be more responsive to power supply dips especially during the summer months.
Espinosa cited the case of Meralco whose application for an interim power supply agreement (IPSA) last April was denied by the Department of Energy (DOE).
The IPSA for 220 megawatts worth of power from Masinloc Power Partners Co. Ltd. which is intended to boost Meralco’s power supply in October this year in anticipation of Malampaya’s preventive maintenance shutdown as well as for next year’s election.
Meralco applied for IPSA after getting warnings from both the National Grid Corporation of the Philippines and the Energy Regulatory Commission of the power supply demand in the coming months.
Espinosa said the DOE bared in a Senate hearing the request would be denied as it was in relation to wholesale electricity spot market (WESM) prices.
“If there was no shortage of power supply, we would go to WESM and the prices would be reasonable. We were surprised that it was denied, disapproved…We have to write the DOE and seek reconsideration of their decision,” Espinosa said.
Espinosa also clarified Meralco is not evading competitive selection for its power supply agreements but said certain instances require the company to contract on an emergency basis to address a looming power shortage and to avoid very high WESM prices.
“All of that redounds to the benefit of consumers. We don’t earn from generation, our business is distribution,” Espinosa said. – J. Macapagal
