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Thursday, August 24, 2006
Cebu power supply from Leyte ‘vulnerable’
By Libery A. Pinili Of Sun.Star Cebu
As energy Secretary Raphael Lotilla stressed the need for additional power generating plants in Cebu, stakeholders in the province’s manufacturing sector warned that the industry’s future will be bleak without sufficient power and water.
Lotilla, in his presentation during the Sun.Star Economic Forum at the Waterfront Cebu City Hotel and Casino yesterday, said that since Cebu is “very dependent” on geothermal power from Leyte—which is transmitted through a submarine cable—the province is “quite vulnerable” to incidents that could jeopardize the supply.
He cited the earthquake in Leyte that cut off power to Cebu and the rest of the grid (Cebu-Negros-Panay) last May.
“Cebu has no choice but to accept the inevitability of having embedded power plants” on the island, he said.
He said while Cebu and the rest of Negros and Panay get more power, about 360 megawatts (mw), from Leyte due to the uprating of the Leyte-Cebu Interconnection Project of the National Transmission Corp. (Transco), Cebu needs additional power plants within the island itself.
He pointed out that in 2005, Cebu’s dependable capacity was only about 402 mw, far below the daily peak demand of about 446 mw.
He said Cebu’s demand is estimated to grow at about six percent a year until 2014.
Edwin Semilla of the Mactan Export Processing Zone Chamber of Exporters and Manufacturers (Mepzcem) said water and power are the “most basic” and important infrastructure for industry.
Semilla identified the industry’s main concerns, in relation to power and water: sufficient and reliable supply, affordable rates, redundancy and voltage stability.
He said the contribution of the manufacturing sector, particularly those in the economic zones, “cannot be undermined.”
However, the industry is suffering under the present power supply situation.
Semilla, an executive for Fairchild Semiconductor, compared power rates in areas where his company operates—at the Mactan Economic Zone (MEZ 1), Penang in Malaysia, South Korea and China.
He said at MEZ 1 and MEZ 2 locators pay P6.50 per kilowatt-hour (kwh) and P4.43 per kwh, respectively.
In Penang, Malaysia and South Korea, on the other hand, Fairchild Semiconductors pays the equivalent of P3.20 per kwh and P3.60 per kwh, respectively. In China, Fairchild pays the equivalent of 55 centavos per kwh for lighting and 36 per kwh for other power uses.
While power in Cebu is more costly, Semilla said manufacturing companies also suffer more power outages and voltage fluctuations.
He cited a Japanese company at MEZ that incurs losses of about P3 million every time there is a power outage, lasting even for a few minutes, because it has to discard products that had been damaged during production.
“The cost of neglect is very dear. If nothing is done now…the future of manufacturing will be very bleak. It would be very hard to attract investments without sufficient, reliable and stable power at affordable cost,” he said.
Lotilla said additional supply for Cebu will come with the completion of the two 100-mw coal-fired power plants proposed by the consortium of Salcon Power and Korean Electric Power Corp. (Kepco).
The Salcon-Kepco plants are expected to be operational by December 2008.
Lotilla urged the Visayan Electric Co. (Veco) to enter into long-term bilateral supply contracts so it would meet the projected demand growth.
Veco chief operating officer and executive vice president Luis Alfonso Aboitiz said the distribution utility’s existing supply contracts with the National Power Corp. (Napocor) and three independent power producers—Toledo Power Corp., Cebu Private Power Corp. and East Asia Utilities Corp.—are enough to cover demand until 2011.
He clarified that the present peak load (when demand for electricity is highest) in Veco’s franchise area (Metro Cebu) is about 295 mw. With an estimated four percent annual growth, demand is expected to hit 359 mw by 2011, he said.
Veco gets 246 mw from Napocor, 70 mw from TPC and 62 mw from CPPC.
Veco had planned to hold a bidding last June for its future supply needs but decided to postpone the activity to an indefinite date.
In an interview, Lotilla said Cebu does not have sufficient supply of renewable energy source.
Thus, it doesn’t have much choice but to allow coal power plants, he said, adding that the Salcon-Kepco plant will use clean coal technology.
For Bisaya stories from Cebu. Click here. (August 24, 2006 issue)
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