PSALM losses due to delays already at P25.6-Billion

The long delayed Agus-Pulangi Hydropower Plants Rehabilitation Project, which has already cost the government more losses in opportunity costs than its proposed budget, faces an even longer delay with the coming election ban on the “release, disbursement or expenditures of public funds” and the “construction of public works, delivery of materials for public works and issuance of treasury warrant or similar devises for a future undertaking chargeable against public funds” from March 29 to May 9, 2022.

As reported by Edmundo A. Veloso, Jr., Vice President, Mindanao Generation, National Power Corporation (NPC) during the Mindanao Power Forum 2021 held virtually on May 25, 2021, the rehabilitation of the Agus-Pulangi Hydroelectric Complex was included in the Philippine Development Plan 2017-2022, with an estimated cost of P20 (B) billion pesos.

The World Bank has approved a USD $ 700,000 loan for the feasibility study and preparation of tender documents. The Department of Energy (DOE) and NPC aim to complete these documents by December 2021, after which public bidding could be started.

There were comments and questions raised at the chatroom during the Forum on the long-delayed rehabilitation of the hydroelectric power plants, as well as the increase in rates that consumers are paying because the Private Sector Assets and Liabilities Management (PSALM) Corporation has been ordering the waters of the Pulangi 4 (P4) hydroelectric power plant in Maramag, Bukidnon to be dumped (instead of using it for its intended purpose to produce electricity), so that it could provide ancillary services for the Mindanao Grid.

Total estimated losses of PSALM in the period 2015-20 due to reduced generation of the Agus HPPs because of the delays in their rehabilitation were estimated at P25,600,000,000.00, while total losses of PSALM in the period 2015 to 2020 due to spillage of water from the Pulangi 4 HPP was estimated at P8,500,000,000.00 or a whopping P34,100,000,000.00 losses for the period 2015-2020 for the two hydroelectric plants.

“Note that the National Power Corporation (NPC) has estimated that the rehab of the APHEC will cost P20-billion pesos. The losses of the PSALM from the Agus HPPs alone (i.e., P25.6-B) would have already been sufficient to cover the cost of rehabilitating the APHEC,” Engr. David A. Tauli, consultant of the Lanao Power Consumers Federation (LAPOCOF), said in a letter recently distributed for the benefit of  consumer groups, civil service organization, and non-government organizations which were woefully underrepresented in the forum.

The longer PSALM delays the rehabilitation of the APHEC the greater the losses to the government of the Philippines. Consumer advocates have long suspected that the only reason PSALM has been delaying the rehabilitation of the APHEC is to enable the hydro plants to be sold cheaply to the generating companies when the APHEC is privatized, Tauli added.

In a related issue, Tauli recommended that experts in the NPC, assisted by independent Filipino consultants, can better carry out the feasibility studies and prepare the bid documents at much lesser cost than the consultant-clients of the World Bank, who will be charging much higher fees that the Philippine government will have to shoulder when it pays back the WB loan.  

Furthermore, when the election ban period starts in October 2021, no infrastructure projects can be implemented and the next administration will again have to wait it out when the international banks and their client-consultants can start another round of money-making for themselves on the good intention of rehabilitating the APHEC, Tauli stressed.

However, Tauli said there is a silver lining behind all these since consumers will not pay for the feasibility study and the bid documents.

“These will be paid for by an agency of the Philippine government. In the case of the equally expensive studies carried out by the NGCP for the VMIP, the ERC approved payment by consumers of the expenses for carrying out the studies (which did not verify economic feasibility of the project), because these were done by a profit maximizing private corporation.

The Mindanao Power Forum 2021 was organized by the Mindanao Development Authority (MinDA) last May 25  and  was attended by around 500 people in-person at the venue and online via Zoom.

With the theme, “Building Back Better Mindanao: A Sustainable and more Resilient Power Landscape”. the Forum sought to assess the impacts of Covid-19 on Mindanao’s power generation, transmission and distribution, and discuss what the government had been doing, and propose to do, to address the problems of the electric power industry in Mindanao resulting from the pandemic.

The Forum also showcased the initiatives of MinDA in the development of renewable energy resources in Mindanao.

However, Tauli noted how consumer groups, civil service organization, and non-government organizations were woefully underrepresented in attendance hence the publication and administration of his paper for their benefit and information.

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