NPC to decommission its diesel power plants on or before April 1

With the National Power Corporation (NPC) finally pulling out of the Catanduanes grid on or before April 1, 2022, Sunwest Water & Electric Co. (SUWECO) has begun installing seven (7) new diesel generation sets at its rented Marinawa Power Plant.

According to the Jan. 27, 2022 agreement inked by the state-owned power firm, the island’s lone private power supplier and the First Catanduanes Electric Cooperative, Inc. (FICELCO), SUWECO undertakes to supply a dependable power capacity of 20 megawatts to the cooperative in time for NPC’s eventual pull-out sometime next month.

NEW GENSETS FROM SUWECO. The power company is now busy installing seven new diesel generators it bought from India as its commitment to supply 20 megawatts to the Catanduanes grid on or before the March 31, 2022 deadline for the pullout of National Power Corporation.

The deal, which is now an integral part of the Phase-In Phase-Out (PIPO) Agreement signed earlier, mandates NPC to supplement any shortage by a dependable capacity of at least 5 megawatts.

Sources said that under the PIPO Agreement, NPC was supposed to cease the operation of its diesel power plants last Dec. 31, 2021.

But just two days before year-end, SUWECO VP for Operations Engr. Danilo Pilones informed the electric cooperative that the delivery of the seven (7) new gensets was delayed due to port congestion in India and Manila caused by the COVID-19 pandemic.

“Relative thereto, we regret to inform your good office that we are not able to commit the installation of the 20MW dependable capacity this December 2021,” he stated, adding that its target commercial operation date is on or before March 31, 2022.

SUWECO management requested for an extension of NPC’s operation of its diesel power plants to allow the company ample time to prepare and pursue a smooth transition to its role as the remaining power provided in Catanduanes.

In agreeing to the requested extension, FICELCO General Manager Engr. Raul Zafe made it clear that the 20MW dependable capacity shall be on a subsidized rate, as agreed upon during their Dec. 28, 2021 meeting.

Last week, SUWECO’s Floro Barrameda confirmed that it has started the installation of the seven units of new diesel gensets from India with a rated capacity of 1.35MW each.

“We hope to complete the installation works in two weeks’ time,” he said in a text message to the Tribune but did not specify the date of commissioning.

An initial four units arrived on Jan. 30, followed by one genset on Feb. 3 and the rest on Feb. 5, with all gensets placed inside the Marinawa power plant rented from FICELCO.

It may be recalled that the Power Supply Agreement between NPC and FICELCO expired last April 25, 2020, and since then the state-owned power firm has augmented the power requirements in the Catanduanes grid using its diesel power plants as the need arises.

Under the original PIPO Agreement, NPC was supposed to begin decommissioning of its diesel power generating facilities in Catanduanes after Dec. 31, 2021.

“It is understood that any failure on the part of the SUWECO to supply the power required capacity in Catanduanes Grid shall be the sole responsibility of FICELCO, without prejudice to the right of FICELCO to go after the SUWECO due to the latter’s aforesaid failure,” it stated.

The forthcoming phase-out of NPC generating assets in Catanduanes does not include the operation of the Balongbong Mini-Hydro Power Plant (BMHPP), which is governed by the power supply agreement between NPC and FICELCO.

Under the PIPO, SUWECO consents to the continuous operation of Balongbong MHPP by NPC “until the same has been privatized/disposed.”

The hydro plant is now the subject of a renewed effort by FICELCO management to recover the same from NPC.

Last December 2021, GM Zafe and Board President Dir. Rodulfo Vargas transmitted to Administrator Emmanuel Yaneza of the National Electrification Administration (NEA) and Secretary Alfonso Cusi of the Department of Energy (DOE) a recent resolution of the FICELCO Board of Directors calling on the two agencies to direct NPC to recognize the cooperative’s petition to reclaim ownership of Balongbong MHPP and cause its legal transfer to FICELCO.

The move is the latest effort of the cooperative to recover the power plant that it built with government loans and equipment from China in the 70’s.

At the time, FICELCO owned and operated the Balongbong power plant and the Marinawa diesel plant.

GM Zafe said that since 1996, the co-op has consistently manifested its intent to reclaim the Balongbong MHPP based on the fact that it was the rightful owner until it was sold and transferred to NPC in 1988.

“For over three decades, FICELCO had been purchasing power supplied by BMHPP on a rate that was not prescribed on the original MOA, thus depriving the people of Catanduanes the chance to afford cheap electricity and thereby defeated the very purpose of the turnover,” he stated.

During that span of time, Zafe stressed, NPC had already recovered way above the amount paid for the transfer, with the cooperative having paid more than P558 million for purchased power to date.

“With the impending decommissioning of NPC generating facilities in the province of Catanduanes, we are confident that it is only just and right to finally transfer the ownership and operation of the BMHPP to FICELCO,” he said.

It may be recalled that in 1988, then Pres. Corazon C. Aquino proclaimed the implementation of P2.50/kwh rate in island grids, including Catanduanes, and mandated NEA and NPC to implement it, paving the the way for the reassumption by NPC of generation functions in the island.

Under intense pressure from NEA which took over the management of the co-op and facing subtle threats from NPC that it would not reassume generation functions if the ownership of BMHPP is not transferred to it, the FICELCO Board grudgingly yielded to the demands and transferred ownership of the plant in August 1988.

NPC paid only P35 million to gain possession of the power plant.

However, the P2.50/kwh power rate guaranteed under the agreement prevailed for only two years, after which the rates skyrocketed, defeating the very reason why the Board agreed to the transfer.

Since 1996, FICELCO had indicated to NPC its desire to reacquire the Balongbong power plant, but each time, it has been rebuffed.

Marinawa sources say it would be difficult for NPC to dispose of the Balongbong power plant to a party other than FICELCO as the cooperative is the owner of the lots on which the plant was built.

The lots had been donated solely for the purpose of enabling the cooperative to own and operate the plant.

During the rainy season, the Balongbong plant produces a maximum of 2.1 megawatts, which is about one-sixth of the island’s peak load of 12 MW.

The Tribune requested a copy of the power situation in the island grid as of last week but FICELCO has yet to forward the report.

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