Manila - Businessmen have warned the government that the financial losses now being suffered by Mindanao as a result of the crippling power outages there may be replicated in premier investment centers of Luzon unless "swift and decisive" steps are taken to meet the rising demand for electricity in these areas.

Subic Bay Freeport Zone (SBFZ) locator and Eastern Petroleum Chairman Fernando Martinez said he expects the electricity demand at the economic zone and elsewhere to even go up “at a much higher pace” if the recent investment upgrades, indeed, translate into an influx of foreign direct investments into the country, leading to greater business activity.

Eastern Petroleum owns a mega gas station at the free port with its retail network spanning numerous stations across the country, including Mindanao.

“We cannot risk having businesses and industries in the area suffer the same fate as those in Mindanao, when more than 50 percent of the country’s gross domestic product [GDP] comes from them,” said Martinez.

Martinez said the Luzon-wide blackout on May 8 has underlined the critical supply level in the metropolis and the country’s main island and the urgency for the government to put a premium on expanding its energy infrastructure to ensure long-term power stability, especially in special economic zones like the Subic Freeport.

“Power-generation projects already onstream or still on the drawing boards should be put on the fast lane to augment the current supply of energy in the Luzon grid, especially after the Department of Energy [DOE]

projected that the island group would need 600 megawatts [MW] of new capacity three years from now,” he said.

Martinez said the “eco-friendly” coal-fired power plant of the Redondo Peninsula Energy consortium at the Subic Bay Freeport could readily address this.

“The government must work in partnership with the private sector to increase capacity in the Luzon grid because this rising demand could even be much higher now that investors are setting their sights on the Philippines. We have been doing this in the petroleum sector where gasoline stations are strategically located to ensure stable supply nationwide,” he said.

A year ago during the same summer months, Martinez’s concerns on the power supply were already being aired by Subic Bay Freeport Chamber of Commerce President Danny Piano. Piano had said Luzon could return to the dark days of the 1990s, when 12-hour power outages put people out of work for hours and paralyzed manufacturing and service firms, unless new power generation facilities become operational before 2016.

Earlier, Federation of Philippine Industries President Jesus Arranza said the government may have difficulty maximizing the benefits of this once-elusive investment-grade status unless it takes decisive steps in putting its energy infrastructure buildup on the fast track and “do away with conflicting policies that may make prospective, long-term investors hesitate.”

The Aquino administration, he said, should “kick-start enough power-generation projects to keep up with the expected surge in demand brought about by the foreseen growth in FDIs. It should look toward treating investors in the power sector as enabling partners because businesses need power, and that more important, this should be reliable, sustainable and cost efficient.”

Earlier, European Chamber of Commerce of the Philippines Vice-President for External Affairs Henry Schumacher said the DOE must declare a power project at SBFZ as a critical one to help ensure stable power supply not only at this special economic zone, but in the rest of Luzon as well. This, he said, will assure prospective locators that their businesses will not suffer, in the years ahead, crippling outages that undermine productivity and competitiveness.

Schumacher lamented that this important Subic project has hit a snag “amid the misguided opposition by certain groups that have raised false environmental issues despite the fact that this coal-fired facility will be using state-of-the-art technology to generate power that is clean, stable and affordable.”

Under its 19-year Philippine Energy Plan, the DOE forecast of a 4.8-percent annual increase in power demand in the Luzon grid between 2012 and 2030 would mean an additional capacity requirement of 10,500 MW over that period.

In the medium-term, the DOE projects that Luzon would require an additional 600 MW every year starting 2016 to meet the demand and the required reserves.

The Luzon grid currently has an installed capacity of 11,739 MW and a dependable capacity of 10,824 MW.

Source: Business Mirror; Front Page; 21 May 2013