STATE-RUN National Transmission Corp. (TransCo) said on Thursday the government is considering the option of building the Visayas-Mindanao grid interconnection project, instead of letting the National Grid Corp. of the Philippines (NGCP) carry it out, a government official said.
The project is part of the concession agreement of the National Grid Corp. of the Philippines (NGCP), the nationwide grid operator, but Transco remains the owner of the transmission assets.
“It is good that they [NGCP] are adjusting the target to 2020 [to finish the interconnection], but I want to look for a way that the cost of the connection should not be passed on to consumers,” Melvin A. Matibag, TransCo president and chief executive officer, said in an interview.
Matibag explained that under the concession agreement with NGCP, there is a provision that states that the development and improvement of the transmission grid is exclusive to the concessionaire.
Following a public bidding conducted in December 2007, the TransCo concession was awarded to the National Grid Corporation of the Philippines (NGCP), which eventually secured a congressional franchise to operate and manage the transmission network through Republic Act No. 9511 for 25 years.
“I want to define exclusive, the reason being that I want find out if the government can be able to do the connection because apparently, the ballpark figure is around P52 billion, so that will be an additional cost to the consumers. Because when the time comes, when the concession is finished and the P52 billion cost is not yet paid, the consumers will shoulder the burden,” he said.
The Transco president said they are making some representations in Congress if the cost of the project can be included in the General Appropriations Act.
TransCo was created under Republic Act No. 9136 or the Electric Power Industry Reform Act (EPIRA).
“The intention of EPIRA is to lower the cost of power but we are one of the most expensive in the region. Transmission cost contributes around 10 to 16 percent to the cost. Why is it like that?” he asked.
Consumers should not bear the cost of that interconnection, Matibag said, but the government is not subsidizing.
“Not necessarily. It may appear like that—that you’re subsidizing. You are not only addressing that the consumers should pay for it, but you’re also addressing the economic development of the country, which is in line with the directive of President Duterte,” he added.
“What I am saying is, do not pass it on. The benefit is not only to consumers but it is also aligned to the development projects of the government,” Matibag said.
Currently, the Luzon and Visayas grids are only interconnected via the Naga-Ormoc high voltage direct current (HVDC) line while the Mindanao grid is isolated. Interconnection will allow grids to get supply from each other in times of supply shortfall.
NGCP announced last February 1 that a Dipolog-Cebu line was viable for the plan to link the Visayas and Mindanao grids. NGCP had commissioned a hydrographic survey conducted from September to November 2016.
An earlier study conducted by NGCP revealed that the eastern route was unsuitable for submarine cable ground laying because of a significant quantity of live ordinance – torpedoes and high explosive shells – from the Battle of Surigao in 1944, an underwater volcano, fault lines, and seismic hazards.
With the hydrographic survey result, NGCP will now proceed with the preparation of a conceptual design, detailed cost-estimate, and update of the system simulation study using the Cebu-Dipolog route, in order to complete documents needed for its Energy Regulatory Commission (ERC) application by April 2017.
Barring unforeseen circumstances and unavoidable delays, the project is estimated to be completed by December 2020.