FAA OnLiNe

Sunday, December 11, 2005

COUNTDOWN



ENGR. Moncada: It's painful but we have no choice

ERC MUST ACT NOW

By Francis Allan L. Angelo

THERE is no other way out of the looming blackout in Iloilo City due to financial setbacks bugging Panay Power Corporation (PPC) but the immediate action of the Energy Regulatory Commission (ERC) even as an Ilonggo solon urged Malacañang to takeover the plant.
Engineer Adrian Moncada, PPC assistant vice president, said unless the ERC gives provisional authority to Panay Electric Company (Peco) to exact a higher generation charge rate on its consumers, “our power plant will definitely shut down on December 15.”
Because of the unbundling of rates policy set by the Electric Power Industry Reform Act,
the ERC ordered Peco to cut its rate to P3.74 per kilowatt hour.
The rate cut affected PPC’s operation as Peco’s payment to the power producer “is not enough for our fuel,” Moncada said.
“We are forced to operate within the P3.74 per kwh Peco is paying us. But we actually bill them P6.83 per kwh. How can we sustain the plant when Peco is paying us less than half of what we charge them?” the PPC executive explained.
Moncada added they cannot anymore resort to load shedding as it would still result to power loss in at least 50 percent of the city.
“Our fuel stock is only enough until December 15. If we cannot buy fuel, we will shut down the plant. This is not blackmail. These are facts and realities and we are only telling the truth no matter how painful it is. In fact, the consumers should be thankful that we are telling them this reality via the media and the local officials. It is not in the characteristic of PPC to resort to blackmail. All of us will be affected by this problem,” Moncada said.
In a month, the PPC consumes 8million liters of Bunker C fuel which is supplied by Shell Corp.
Considering the current price of fuel, the power producer spends P160million for fuel alone.
Since the implementation of the rate cut in September, Peco already owes PPC P360million.
Moncada revealed Shell will not supply fuel to the plant unless PPC pays its debt to the oil firm.
PPC has no other fuel source options because of the existing contract with Shell, Moncada added.
Moncada said the only immediate solution to the problem is for the ERC to give provisional authority to Peco to charge an ample rate so it can pay PPC’s power supply.
“If the ERC can grant Peco’s prayer for provisional authority, we can go to the bank to borrow money for our fuel using the ERC ruling as a guarantee for the loan. The provisional authority is strong justification for the loan,” Moncada said.
Executive action
Meanwhile, Iloilo City Lone District Representative Raul Gonzalez Jr. wrote President Arroyo to takeover PPC’s facility at Barangay Ingore, LaPaz to avert a “dark, dangerous and gloomy holiday for us.”
In a copy of the letter obtained by The Guardian, Gonzalez said the blackout will have “serious implications to Iloilo City and the region.”
“I beg your Excellency to for the issuance of an executive order for the immediate albeit temporary government takeover of the operations of the said power plant,” Gonzalez said in the letter.
Gonzalez cited section 17, article 11 of the Philippine Constitution which allows the government “to take over privately owned public utility or business affected with public interest.”
“This is not much so much a matter of imminent danger, but a matter of clear and present danger to the economy, peace and order and political stability,” Gonzalez said.
Gonzalez also suggested the deployment of a power barge to Iloilo City “in any eventuality.”
Due process
But Moncada said the government cannot just grab control of the 72-MW plant.
“There must be due process on this matter. What kind of takeover will the government do? If they can give fuel to us, that would be better. But to physically take control of the plant is a legal question I cannot address right now,” Moncada said.
Moncada also said the plan to takeover PPC will only result to serious repercussions to the government in the international community.
“What will the international community say when the government grabs control of multinational energy firm? This will discourage investors to come to the country. The reason why we were invited here to invest is to supply reliable and quality energy. But since we are also businessmen, we expect appropriate compensation for our product and services,” Moncada said.
Moncada added they will meet with Gonzalez today to discuss PPC’s problem. (Published in The Guardian, December 9, 2005)

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