Philippine Power Plant Generation Project Without Financial Closing

May 12, 2015

Seriously Hemorrhaging Power Sector

In 1990, the National Economic Development Authority - NEDA, asked for the input of the Department of National Defense then under Secretary Fidel V. Ramos, for the medium term projections of the national economic development plan.

We drafted the response of Secretary Ramos and one of our more prominent suggestions was for the Philippines to increase by leaps and bounds its refining capacity for raw diesel fuel and to make a firm target of building a nationwide power infrastructure with a generation capacity of 100,000 Megawatts or even higher.

At the time, the Philippine population, 60,703,206 compared to that of Taiwan that had only a population of 20,393,628 was 2.97 times as many as Taiwan's or 297% bigger. In that period, Taiwan already had an installed capacity of around 20,000 Megawatts.

The total land area of Taiwan is only 36,000 square kilometers; whereas, the Philippines has a size of 300,000 square kilometers, nearly ten times the size of Taiwan.

Yet, the combined installed capacity of all power plants in the entire Philippines during the year in question was only 5,772 Megawatts. Today, while Taiwan already has more than double its capacity in 1990 (Taiwan installed capacity is above 45,000 Megawatts as of end of 2013), the total Philippine generation capability today is only 17,000 Mega Watts.

If you look at World Bank figures, the Philippines has a capacity of 23,474 kt of oil equivalent or already 27,300.69 Megawatts as early as in 2009. How the World Bank reflects a bigger capacity could mean that some of the power plant projects it supported through loans are mirrored in its statistics, whereas in the Philippines' database, some of the foreign loan-assisted undertakings did not push through because the monies got lost in the traffic. The funds got hijacked by criminals in expensive suits and barongs.

For a country ten times bigger than its neighbor that has a power infrastructure capable of generating 45,000 MW, we are able to generate only less than half of the capacity of Taiwan.

It is no wonder why all the efforts of the present government and past administrations to prevent the inevitability of the forthcoming extreme power shortage in many areas of the country are all abject failures.

Be Prepared

Every single sector in the Philippines should brace for the impact of the power shortage when the month of June and July come around. If the heat brought about by El Niño will be very severe due to global climate change, more than 80% of the entire current Philippine population of over 100,000,000 will be suffering and cursing and blaming the government, to no avail.

Appeal for Investor Support

What is needed is for investors all around the world today to come to the rescue, even before the impact of the power outages will hit the country.  When the stirrings of the outages takes its casualties by the tens, hundreds and over, affecting both locals and tourists – young and old, it will have become useless and tenuous to be calling for "HELP!” when people especially very young vulnerable children as well as senior citizens are getting ill or dying.

The risks to the population arising from power shortage, to say the very least, are unpleasant to imagine. The damage will be felt well unto many, many months after 2015 is gone. It is immensely possible that the pain and hardship will linger in the Philippines until 2017.

Ready To Go Power Plant Projects

The application for full government approval of a power generation plant for Independent, Co-Shared (Government and Private), as well as other types of these projects on any of the financing schemes available (Build Operate Transfer, Build Operate Lease, etc.) under normal circumstances takes about four to five years to complete - with all the requirements already complied by the applicant.

Some projects with small power capacity for instance, in rare circumstances are completely approved within the span of three to four years.

Under the dynamics of Philippine setting, the applicant usually exposes itself from a low of THREE HUNDRED MILLION PHILIPPINE PESOS up to sometimes very high exposures. In the case of a power facility in Quezon Province, before it became operational and had all the necessary permits on hand, the project proponent actually spent billions - some of which went into the hands of high ranking officials in the Executive Branch and political quislings that claimed closeness to the Philippine President.

None of the payouts composing the bigger share of those billions spent by the Quezon Province power project are recorded on any ledger in the country, with the possible exception of the very private diary of the paymaster or fund comptroller of the company project proponent.

Financing the securing of a power generation plant permit to construct and operate and the appropriate license or franchise for the operator forms part of the horrendous hidden costs of the total budget for building the facility and running it.

Over the years, projecting enormous income from owning and operating power generation facilities, many entrepreneurs or even public institutions, began their dreams of installing power facilities. The types of these facilities includes the non-renewable (mostly diesel-dependent) and renewable power sources, such as biogas, hydro, solar, wind and ocean, among others.

More than 600 of these startups and big proponents were able to secure licenses and permits from the proper authorities and the consent of the stakeholders. Out of a total 648 power projects, there around 90 power projects that no longer have any money to proceed with the construction and eventually, the operation of their proposed power plants.

Financial Support

In the case of more than 90 power plant projects out of a total of 648 power generation projects all in all around the Philippine Archipelago, there are no investors to fund added activities beyond the securing of the government permits and approvals.

Therefore because of lack of capability of the applicant holding the final government approval to start the building phase of the power generation facility, the project is stalled indefinitely instead of being able to hit the ground running. Thanks to the bribes and gifts that top officials extort out of power project proponents, by the time the project is due to break the ground, much of the initial funds allocated for the project have already gone down the drain.

Out of the remaining 558 projects of the 648, a large percentage will not push through, also because of the confusing position of the government vis-a-vis the private sector on the parameters to be used in categorizing projects as having financial closing or not.

In the summations of the projected capacities alone, the power sector states that 90 power projects without financing will produce 12,170 Megawatts of electricity for the combined areas of Luzon, Visayas, Mindanao.

However, surprisingly, according to the government report as of March 2015, the total capacity in terms of electric power that will be produced by these 648 power plants - nearly 100% of which is initiated by the private sector, is only more than 10,000 Megawatts. We need to clarify further with the Department of Energy how their figures appear to be very topsy turvy.

All in all, these 90 power projects require more than UNITED STATES DOLLARS SIXTY BILLION SIXTY MILLION ( $60,600,000,000 ) to build up to Start Up Commissioning.

Thereafter, the unfunded 90 power projects will need token augmentation funding for continuous operations since the facility's capacity is badly required in the area where it is situated.

The need is doubly emphasized for the current year 2015 when the summer season compounded by the El Niño phenomenon will geometrically amplify the consumption of power in the Philippines. God forbid, if the solar maxima or solar super storm happens, goodbye power problems. Also, goodbye Philippines!

Estimates coming from the Department of Energy state that, broken down into capacity, the following are the required investments for the major areas of the Philippines:

Luzon
10,000 Megawatts - 40 Units - $15,000,000,000.00 

Visayas
470.00 Megawatts - 11+ Units - $705,000,000.00

Mindanao
1,700 Megawatts - 30+ units - $2,550,000,000.00

Negotiations Talking Points

For the fully approved and ready to start power generation projects, the required capacity of the interested investor who seeks to buy out any one of the unfunded approved 90 power generation plant projects is:

1. Agreement of assignment, transfer of the Power Project between original project owner and the Investor.

2. Reimbursement for the original project owner on case to case basis of cost of three-to-five year workout for approval of project at minimum or floor rate PHP300,000,000.00 to a higher amount, to be specified by the owner of approved project.

3. Proof of Capability to fund at minimum of USD5,000,000 per Megawatt of the power generation plant project being taken over or funded by the investor.

4. Retention of the original owner of 15% share in the resulting spin off entity that will operate the power plant and pro-rated income from sales and marketing after deductions of the power plant.

Any investor has to be fully transparent and must submit verifiable proof of fund prior to commencing any formal negotiations with the original project owners to ensure the closing of the deal.

Any inquiries related to this article may be forwarded to asiacommunications@msn.com, telephones +632-904-1950, +632-5033966; mobile phone +639162726638 and +639288389444.

             

GREENGOLD CYBERPARKHOLDINGS CORPORATION

Related Readings:

Philippines power profile

Philippines - Energy Supply Outlook

Department of Energy Portal

For a long time, it has been the conventional wisdom to expose skilled, highly trained and properly vetted personnel to extreme dangers - sometimes equal or greater than that which confronts counter-terrorist or counter-drug operations elements. Yet this is the job of Rescue, or more aptly as it is called, SAR - Search and Rescue.

We believe in the significance of SAR. However, for the benefit of both the party being rescued and the rescuer, we stand in our conviction that beyond post-disaster search and rescue or SAR during the incumbency of a disaster, it would be a positive addition to the design to introduce Forewarning and Early Measures.

United States of America for example has the SAR Task Force.  Under the SARTF are units for instance such as the United States Air Force Para Rescue. Brazil's Ministry of Defense has Operation Rescue under the defense ministry's Subsidiary Actions.

Specially trained elements of the China Coast Guard - among others - undertake SAR operations within the bounds of the People's Republic of China. Taiwan has its own CMC Taiwan Rescue.

In the Philippines, in 1990-1991, the authors were requested to form a plan for the Reactivation of the Armed Forces of the Philippines Forest Ranger Battalion. Together with the plan, also submitted were other proposals relevant to disaster response.

The reactivation of the Forest Ranger Battalion was not approved at the Department of National Defense. A good number of the proposals detailing the pressing need for modernization of defense assets, equipment and technologies, for making disaster and emergency response more effective and efficient were adopted as the department's position by then Secretary Fidel Valdez Ramos.

Today, we encourage the Philippine Government and whatever state government around the globe that usually suffer from major or mega disaster, to engage in constituting Forewarning, Early Measures, Search, Rescue, Recovery (FWEMSAR) Task Force that will be empowered by the State to undertake all means of life saving procedures, counter measures even make arrests in the prosecution of their functions, duties and responsibilities.

SAR is usually a limited action affair.  Like Special Operations (Spec Ops) and Special Warfare (Spec War) actions, SAR is highly seasonal or extremely infrequent.  Although at the time of its occurrence, the level of threat is clearly very high - both for the SAR operative and the subject being searched and recovered.

Spec Ops and Spec War operatives usually conduct relentlessly continuous training, skill refresher and crash learning sessions to hone their abilities. SAR operatives do the same.

December 9, 2013

Dear Sir / Madame,

Greetings!

This is to formally invite your attention to  our determination to hold the international conference on geohazard mapping and relevant environment issues. Our group decided to launch a campaign in 2009 for sustainable crisis hazards mapping and relevant environmental concerns after returning from Mindanao, Philippines following the end of the effort in ending the highly expensive hotel billeting by Juma’a Abu Sayyap of selected staff members of the International Committee of the Red Cross (ICRC) from Switzerland (Andreas Notter), Italy (Eugenio Vagni) and Philippines (Mary Jane Lacaba).

The purpose of the conference is to provide a fora within Southeast Asia for developed and developing countries, for consolidating databases, integrating and perfecting geohazard mapping and tagging - coordinates and all correlational information for disaster hot spot / safe spot zones, among others. When we began this effort, we noticed that mostly poor developing countries only, responded to our invitation. Understandably, nearly all or most of them required us to sponsor their travel and accommodations.

Our basic belief is in putting into action the requisites precluding taking of measures to prevent and mitigate both the risks of loss of lives and property and actual casualties during a disaster. Furthermore, to allow disasters to ravage our communities without prior mitigation measures becomes an extremely tedious issue due to the fact that certain quarters in the public sector are remiss in delivering aid to victims of calamities [e.g. recent super typhoon Haiyan (Yolanda) here in the Philippines where it took more than one week for the government to respond].