Fools rush in

Ben D. Kritz

Ben D. Kritz

PRESIDENT Rodrigo Duterte is quickly establishing a reputation for indecisiveness, and this time, it’s going to cost the country a king’s ransom.

Just a few days after dismissing the possibility of resurrecting the Bataan Nuclear Power Plant (BNPP), Duterte reversed himself, and informed energy secretary Alfonso Cusi that he would authorize a budget of $1 billion for the plant’s rehabilitation and start-up.

Someone should have done the Philippines a huge favor and bulldozed that wretched monument to Marcos folly a long time ago, then we would not be continually having the debate over whether or not using the plant for the purpose it was intended more than 30 years ago is a good idea. That debate has only carried on for as long as it has because the BNPP exists, not because the Philippines actually has a real need for or any capacity to operate a nuclear power plant. No BNPP, and the topic of nuclear power would not be raised nor be missed.

Not all of the arguments made by proponents of the BNPP are unreasonable. Assuming the plant is in proper condition after its long period of dormancy, the $1 billion estimated price tag to bring it to life, with a timeframe of about a year, is a bargain compared to a similar-sized (620 megawatts) coal or gas plant, which would cost about $3 billion and take three to five years to build. The cost of the electricity produced by a nuclear plant of the same common type as the BNPP is not the cheapest option, but it is reasonable, in most cases less than coal-fired power and slightly higher than electricity from gas-fired plants. And even though nuclear accidents tend to be spectacular, they also tend to be relatively rare; in the history of commercial nuclear power, there have been fewer than a dozen accidents resulting in deaths, or contamination beyond the plant site.

Although neither Duterte nor Cusi provided much explanation for the President’s about-face, it was likely those sorts of arguments that swayed him. All of those arguments, however, are based on some assumptions that may not be valid. The biggest assumption is that the $1 billion price tag to rehabilitate the plant is an accurate estimate. The figure is based on a feasibility study conducted by Kepco more than six years ago. Kepco, which operates a twin of the BNPP in South Korea (although not for much longer—the plant is scheduled to begin the decommissioning process next year), was probably in the best position to make an assessment of the BNPP, and may have been the presumptive operator of it had the rehabilitation moved forward in 2010 or 2011. By early 2012, however, Kepco officials were saying privately that the estimate was certainly too low, and that even though no official discussions with the government had been held, the company considered the BNPP “financially unfeasible.”

Recent reports have said there are hundreds of defects in the plant, despite the P40 million spent annually for its preservation since its completion in 1984. The accuracy of those reports is questionable, as the BNPP’s proponents have been quick to point out; but they do not have any more credible evidence to back their assertions, either. The disturbing fact is that the administration is apparently willing to forge ahead with recommissioning the BNPP based on nearly seven-year-old technical data and cost estimates, which puts the expected expenditure and timeframe in serious doubt.

That also puts the argument about nuclear-generated electricity being significantly cheaper than other forms in some doubt. The big upfront costs of recommissioning the BNPP—a minimum of P45 billion—would need to be recovered, which would result in a rate premium. Even after those costs were recovered, the BNPP would not make much of an impact on power prices as a whole; at 620 MW capacity, the BNPP would provide a bit less than 10 percent of Luzon’s demand, meaning that its presumably lower-priced electricity would reduce spot market rates only fractionally.

And none of the foregoing begins to address the time and cost of putting together a regulatory and manpower framework for a nuclear power industry, even if that industry consists of just one plant. In 2008, the International Atomic Energy Agency (IAEA) detailed what the Philippines would need to do to properly manage a nuclear power sector, without putting a price tag on it; since then, virtually nothing has been done.

It may also be worth noting that Vietnam, which has spent about six years working on a nuclear program, has just decided to cancel its two planned plants, after having determined that the decrease in conventional energy prices, the likelihood that the Russian- and Japanese-designed plants were probably going to cost twice the estimated $18 billion earmarked for them, and lower expected energy demand growth over the next few years, made the nuclear option unattractive.

Rushing into nuclear power—as ironic as that notion seems, given that it involves a more than 30-year-old facility—is irresponsible and costly, and the Philippines can find many other, more productive ways of spending its time and money.


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