Industry output dives 50% on Mindanao Power Crisis

Member companies of the Cagayan de Oro Chamber of Industries are hurting because of the Mindanao power crisis.

"Overall, production has slowed down by an average of 50 percent due to (among others) curtailment of power supply," said Jerome Soldevilla, COCI president.

Soldevilla said the COCI´s 14 members accounted for $ 165.8 million of Region 10´s total export volume in 2008 and constitutes 37.7 percent of the total exports of Cagayan de Oro and Misamis Oriental.

Growth in the industry sector, which accounted for 30.3 percent of the region´s economy in 2008, already slowed to 4.2% growth in 2008, or 4.4 percentage points short of the 8.6% growth recorded in the previous year, figures from the National Statistics and Coordination Board (NSCB) show.

From a peak demand of 1,316 megawatts (MW), the National Grid Corporation of the Philippines (NGCP) is now capable of supplying less than half or 600 MW, more or less until the rains come in June.

NGCP´s Mindanao Regional Control Center served notice Thursday it was imposing a "Revised Load Curtailment Scheme (Grid-Wide) March 4, 2010, effective 0915 Hrs. due to "Generation Deficiency" caused the reduced capabilities of the Agus and Pulangi hydroelectric plants (80% and 90% reduction, respectively) due to the very low inflow to their reservoirs; reduced capability from Maria Cristina Falls Power Plant from 210MW to 150MW; and the unplanned outage of 48 MW AP-Therma Marine Mobile 2 Unit No. 2 (PB 117) due to fuel leak.

In the franchise area of Cagayan Electric Power & Light Co. (Cepalco), the NGCP further cut its supply Thursday, resulting in unscheduled brownouts all over the city.

The notice set the curtailment level as of that time to 750MW until further notice.

"We were only given 42 MW by NGCP from our normal average demand of 120 MW," said Marilyn A. Chavez, senior manager for customer and community relations.

Already, Soldevilla said Mindanao Silicon Metals shut down two of its three furnaces last week as the power provided by NGCP was cut by as much as 70 percent.

"If the power situation gets worse in the coming days, it has to shut down operations," Soldevilla stressed. "This means losing about 45 tons per day of silicon metals production output and 300 jobs."

An internal survey conducted by COCI on some of its member industries show they have an aggregate consumption ranging from 59.21 to 81.08MW. However, the surveyed firms´ can only generate 34.10MW for a 60 percent shortfall of 46.98MW to be sourced either directly from the outside sources or the local utility during peak hours.

Manufacturers that would operate their embedded generators stand to increase their combined cost of production by about P27 million per month, Soldevilla added.

"The situation is bleak," he noted. "The power shortage is harming the industries, threatening to negate a positive outlook of economic rebound that it has portrayed for 2010."

To immediately address the crisis, Soldevilla said the COCI is asking the government (especially the Energy Regulatory Commission) to provide safety nets to cushion the impact of higher power costs arising from operating embedded generators.

"COCI is also calling for a review of the ancillary service fees charged by distribution utilities and transmission companies; Incentives for industries doing voluntary shedding," he added.

However, rather than grant emergency powers to the president, COCI would rather ask her to use the powers she now has at her disposal to address the situation, he said.

COCI Member Companies include Asia Brewery, CATIMCO Group of Companies, Coca-Cola Bottlers Philippines Inc, Del Monte Phils. Inc., Limketkai Manufacturing, Nestle Philippines, Phil. Agro Industrial Corporation, Pilipinas Kao Inc, Phil. Sinter Corporation, PICMW, RI Chemicals Inc., Mindanao Silicon Metals, Elegant Chemical Alloy and STEAG State Power Inc.

The Oro Chamber earlier presented a joint resolution with the PHIVIDEC Industries Association (PIE-MO) and the COCI calling for immediate government action to address the power supply problem in Mindanao.

The resolution was presented to Energy Secretary Angelo Reyes during the Feb. 18 stakeholders meeting in Davao City by Oro Chamber Vice President for the Manufacturing and Industry Sector Ghaye Alegrio, the Oro Chamber and the other business groups in Cagayan de Oro City and Misamis Oriental.

The resolution urges the Department of Energy (DOE), National Power Corporation, NGCP and the Power Sector Assets and Liabilities Management Corporation (PSALM) to immediately resolve pending generation and transmission related problems in the Mindanao grid.

Among the measures cited in the resolution were the immediate resumption of the Iligan Diesel Power Plant operations, expeditious repair of the Agus 2-Kibawe 138kv transmission line and the Maramag-Bunawan 230kv backbone project.

The chamber lauded NPC´s swift action on its request with the Iligan Diesel power plant Unit 1 resuming operations March 1st. Another resolution which was acted upon swiftly by the NGCP was the repair of the Agus 2-Kibawe 138 KV line, a major transmission line which wheels power to southern part of Mindanao.

"The Oro Chamber and its partner organizations are hopeful that government will give the same attention to Agus 5 as well as strongly campaign for additional investments in the power sector of the island," the chamber said in a statement.

President Gloria Arroyo said Thursday she would declare an energy crisis in Mindanao by invoking Section 71 of the Electric Power Industry Restructuring Act (Epira) as recommended by Reyes. Section 71 empowers Congress to authorize through a joint resolution the establishment of additional generating capacity under such terms and conditions as it may approve.

Once the president has declared a power crisis, Congress can call a special session even during the electoral campaign period to pass a resolution empowering government to undertake additional measures to address the power shortage.

House Speaker Prospero Nograles confirmed Thursday the availability of a P500-million emergency fund in the 2010 National Budget to address the power crisis in Mindanao which NPC has anticipated as early as 2006.

DOE will recommend the lease of a 160-MW generator, the activation of the Northern Mindanao Power Corp. mothballed 70-megawatt Iligan Diesel Power Plant 2, and contract another five megawatts from the Southern Philippines Power Corp. (SPCC).

Government estimates the cost for these measures to range from P 8-10 billion, depending on when the rains resume.

Meantime, the Oro Chamber will present its paper on the non privatization of the Agus and Pulangi hydro electric power complexes to the Regional Development Council in Region X on March 11 for its endorsement.