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December 22, 2014

THE MANILA STANDARD TODAY: Malampaya Fund to pay for private genset use

The emergency powers granted to Benigno Aquino III will enable him to tap P2 billion from the Malampaya Fund to subsidize the payment to private companies who will run their generators when the supply of electricity is low, Oriental Mindoro Rep. Reynaldo Umali said Sunday.

In an interview over radio dzBB, Umali said this would shield consumers from having to pay more for their power.

Umali, chairman of the House committee on energy, noted that the government would be shelling out P200 million a month to pay the private companies enrolled in the Energy Department’s Interruptible Load Program (ILP).

For five months during the summer starting March, Umali said, the expected cost would reach P2 billion, which would be funded by the Malampaya funds.

Earlier, the Supreme Court said the use of Malampaya funds for non-energy –related projects was unconstitutional.

It was for this reason, Umali said, that Congress granted the President emergency powers.

“President Aquino will tap the Malampaya funds so the government can subsidize whatever expenses to be incurred in the ILP… The public will not pay a single centavo for any increase in power cost,” Umali told dzBB.

Umali explained that since the ILP would use diesel generator sets, the cost woul increase to P14 per kilowatt hour from the currect P5 per kwh under normal circumstances.

“The Malampaya funds will take care of the P9 per kwh difference,” Umali said.

Umalis said the ILP scheme was cheaper that the Energy Department’s original plan to lease power generator sets for P6 billion.

At least 145 large companies in Luzon have pledged to runt heir standby generator sets this summer, so that other consumers may have an adequate supply of electricity, House deputy Minority Leader and LPG-MA Rep. Arnel Ty said Sunday.

“Once the 145 firms drive their backup generators, some 603 megawatts(MW) of supply from the Luzon grid will be freed and available for use by smaller businesses and homes,” said Ty, a senior member of the House energy committee.

Ty said the 38 big customers of the Manila Electric Co. plus 107 clients of retail electricity suppliers have voluntarily enlisted in the ILP as of Dec. 12, 2014.

Under the ILP, participants with loads of at least one MW each – mostly industrial facilities, shopping malls as well as office and residential skyscrapers – will be asked to disconnect from the grid and run their standby generators, once the supply of electricity falls short of demand.

The ILP guarantees other consumers – those without any self-generating capacity – ample electricity despite potential supply deficiencies, the lawmakers said.

“We have very high hopes that the ILP will help address the power supply shortfall in a big way,” Ty said.

He also expressed confidence the falling price of oil would encourage more businesses to join the ILP in the weeks ahead.

“Apart from spending less for their regular electricity bills, businesses temporarily self-generating some of their power needs this summer will actually fuel prices,” Ty said.

Oil prices have fallen below $60 per barrel, down 47 percent from $107 in June this year.

The multinational financial services firm Morgan Stanly sees oil prices falling further, to as low as $43 per barrel by the first half of 2015, due to over-flowing supply amid sluggish demand.

Luzon faces a 700-MW power deficit over 16 weeks from March to July 2015, with the risk of brownouts happening one hour per day every week, according to the Energy Department.

The House of Representatives has already passed on third and final reading President Aquino request for extra muscle to deal with the looming power shortage.

Umali said his Senate counterpart, Senator Osmeña III, had assured him they were on the same page.

“As far as we are concerned, it is mission accomplished in the House. The Senate already began its deliberations last Dec. 10. So we will meet with our conterparts in the Senate to thresh out what else needs to be done,” Umali said.

Earlier, Osmeña said the President didn’t need emergency powers and that no real power shortage loomed.

A labor alliance on Sunday called for an independent, multi-sectoral committee appointed by the President to implement the emergency powers approved by the House.

The Trade Union Congress of the Philippines-Nagkaisa said this would bring transparency in the way the emergency powers are used and in the way the ILP is carried out.

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