• A lack of planning, perhaps

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    The shutdown of the Malampaya Platform on Saturday, which will have an impact on the power supply for the Luzon grid, somehow shows a lack of planning by the government.

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    The shutdown of the Malampaya facility for maintenance checks will last until December 8 this year. The natural gas from the facility powers the 1,200-megawatt Ilijan combined cycle natural gas plant owned by Kepco Philippines Corp., and the 1,000-MW Santa Rita and 500-MW San Lorenzo natural gas facilities of First Gen Corp.

    The timing of the shutdown coincides with the approach of the Christmas holidays, where power consumption is usually at its highest. And it is usually during the pre-Christmas months when manufacturers also ramp up their production to make sure supplies for the holiday celebrations and festivities are enough.

    But instead, the Department of Energy (DOE) appealed to manufacturing plants and large power consuming establishments in Luzon to coincide their maintenance activities with the Malampaya shutdown, to minimize the effect of the closure on their electricity bills.

    This suggestion may have noble intentions but it may sound like a joke to large factories that usually conduct their maintenance works only after they have produced enough inventory for high-consumption months, like December.

    If there is a consolation, the colder month of November sees a drop in the use of cooling appliances in households.

    But the bad news remains—power rates will rise a bit during the time when the Malampaya facility will remain inactive.

    On Friday, the Manila Electric Co. announced that electricity rates for November will go up by P1.24 per kilowatt hour for a typical household with a monthly consumption of 200 kWh. The adjustment will translate to an additional P247 in the customers’ bill for the month.

    While the DOE should be lauded for making sure that the Malampaya facility should be maintained well, and will continue to operate efficiently in the next years to come, the effects of the shutdown that will be felt by big businesses will surely get the attention of foreign investors eyeing the Philippines.

    Foreign investors are quick to cite the high power rates in the Philippines as a major obstacle in setting up business in the country. And the Malampaya shutdown during the months when factories have to increase production for the holidays will not help convince foreign investors that the government has a long-term perspective in making the Philippines a preferred investment destination.

    Fortunately, the Malampaya shutdown will only last for about a month. The only thing that the Aquino administration and the DOE should do is to make sure that another disruption in the operations of the plant will not result in an increase in electricity prices or a tightening of the power supply.

    This could be achieved if the DOE succeeds in facilitating the establishment of more power plants in Luzon to ensure that there will be more than enough power supply taking into account future demand.

    If the DOE is a very good long-term planner, then the Malampaya shutdown will have a zero effect on current electricity prices and supply.

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