Stakeholders in Mindanao want their voice heard on the power supply solution that they are now seeking government leadership’s attention on their bid for amendments in the Electric Power Industry Reform Act (EPIRA) for a provision that will primarily defer the privatization of the Agus and Pulungui hydropower complexes which have aggregate capacity of 982 megawatts.

Initial dialogue on such policy prescription was reportedly raised with Energy Secretary Rene D. Almendras when he visited Mindanao.

The energy chief noted that he is open to the suggestion yet emphasizing on the need for careful study of such policy steps. He further set qualifier that the matter has to be thoroughly discussed with Finance Secretary Cesar Purisima, being the board chairman of asset-seller Power Sector Assets and Liabilities Management Corporation.

The contention of the stakeholders in the grid, including businesses affiliated with the Mindanao Business Council, Davao City Chamber of Commerce as well as Mindanao Electric Power Alliance, would be to maintain more cost-competitive power rates as a transitioning arrangement.

With pricing and supply emerging as critical twin issues for the grid, they noted that retaining the two biggest plants under government hands will more or less give them cheaper rates. But they also recognize that deferment on the hydropower assets’ sale shall go along with invitations for private sector power investments for additional capacity and diversification on generation sources.

Businesses in the area qualified they are already amendable to the idea that private sector investment will more or less reflect true cost to ensure return on investment hence the rates will expectedly be higher, than what is perceived as the subsidized rates of NPC. Blending the two rates though, they said, will give them more affordable power rates.

The energy secretary is giving close attention as to how the Mindanao power supply dilemma can be addressed soonest, noting that the key thing to be fixed there to entice investments would be “pricing concerns.” If EPIRA will have to be amended to defer the hydro plants’ privatization, two provisions of the law will have to be revisited – one is on the specified privatization timeframe for the assets; and second is on the prohibition for NPC to enter into new power supply contracts.

Section 47 (f) of the EPIRA prescribes that the Agus and Pulangui plants may be privatized within 10 years from the law’s effectivity or around 2011. While PSALM was given the discretion on the assets’ disposal, it cannot just simply do so without due consultation with Congress.

With privatization deferment, it was noted that Agus and Pulangui plants owner NPC or PSALM may need to enter into new supply pacts, hence, necessitating modifications also on Section 47 (j), given its prescription that “NPC may generate and sell electricity only from the undisposed generating assets and IPP contracts of PSALM Corporation and shall not incur any new obligations to purchase power through bilateral contracts with generation companies or other suppliers.”

The power industry reform law has likewise been very specific under Section 47 (e) that “in cases of transfer of possession, control, operation or privatization of multi-purpose hydro facilities, safeguards shall be prescribed to ensure that the national government may direct water usage in cases of shortage to protect potable water, irrigation and all other requirements imbued with public interest.”