Press Release
March 17, 2011

Transcript of Sen. Serge Osmeña's ambush interview after the hearing
of the Joint Congressional Power Commission

What did you find out in today's hearing?

SERGE: We found out today that there are still people who did not know this situation has come about in Mindanao and how we were in a similar situation in Luzon in 1992, when we had 8-hour rotating brownouts everyday, which was really unheard of in any major metropolis anywhere around the world. So, the only solution was to let the market dictate when power would come into being, to allow the private players who have the money to be able to build the plants that we require for our economic growth.

Itong NGCP statement that it has started frontloading the Leyte-Mindanao interconnection projects?

Yes. The people of the Philippines would have to pay for that. In other words, we go back to the basic rule. We cannot have what they call Class A facilities and paying Class C rates. If we want first-world infrastructure, first-world highways, we have to pay first-world rates, that's the nature of things.

Iyong P24 billion?

The P24 billion will be absorbed over time by consumers in this country. Highway iyan eh.

This is a step forward?

Definitely this is a step forward. Because if we do not interconnect, our grid remains too small. And as we were in Mindanao before, we will have a shortage. Last year, they suffered a very horrible shortage. If I were an investor, and I'd like to put up a plant, whether it's a steel plant or a manufacturing plant in Mindanao, the first thing I'd think of is, 'Where will I get my power for the next 25 years?' Because it would take 25 years to recover the cost of my factory. Kung hindi stable, hindi ako papasok diyan. Bak next year may brownout. We have to stabilize the power grid so people can go almost anywhere in the Philippines and say, 'Yes, I will have power. And I will have power at reasonable rates.'

Will this decrease the current rate?

Yes, this will decrease the current rate but not by much because it is divided by so many terra watts hours of power. Divided by iyan eh. So, maliit lang iyan. P24 billion is just a drop in the bucket if you divide it by 25 years.

May epekto ba dito ang La Nina?

Mindanao is lucky in the sense that their dams are full. As you've heard Rufus Rodriguez, they do not have a summer. It's still a rainy season there. But the Pulangi plant, it's going to be closed down for dredging, maybe for 2 to 3 weeks. We hope the rains continue because Agus will have to take the slack for Pulangi.

Iyong P24 billion is only for the inter-connection? Are there other inter-connection in the works?

In the works? No, that's the big one. Luzon, Visayas connected to Mindanao so we will have a bigger grid. That's my dream, one of these decades, we will be able to connect with Indonesia, o kaya we will be able to connect to the Mainland, if it is cheap enough. Kung may kakulangan dito sa Pilipinas, puwede tayong bumili sa Brunei, Malaysia, sa China. The bigger the grid, the more efficient it is.

Anong capacity nito?

The grid is composed of 3 major sectors - the generating sector, the transmission sector, the distribution sector. The distribution sector you know is the last na, ito yung katulad ng Meralco, etc. Between the major islands all over the Philippines, you have this main highway, that's the transmission sector. We want that connected so that the bigger the coverage, the more efficient the use of power within that. For example, let's say Cebu is not connected to the grid. Hirap na hirap kami sa Cebu, becase we'll get our power from Leyte, from Negros, we will have a very difficult time progressing. We'll have to build our own plants. Eh ang planta, napakalaki, magkakaroon ng planta iyan. You cannot building a 10MW plant, that's too small, so you'd build a 200MW plant. So, I'd build in Cebu pero kulang lang sila ng 50MW dun. It does not make sense if I put up a plant that is smaller than 200MW, but what do I do with the remaining 150MW kung hindi na absorbable sa Cebu? If I were connected to the grid, ah kulang sila sa Bohol, I can sell it to Bohol; kulang sila sa Negros, I can sell it to Negros.

Ano ba iyong total demand? Sabi mo kanina, baka mamaya we'll build this highway tapos 2 sasakyan lang ang dadaan?

Luzon is gonna have a shortage this year, about 300MW, peak demand. 300 is projected. But since it's raining and raining, puno ang Magat, puno ang Pagtabangan, so okay lang. Kasi usually during the summer, kukulangin ang tubig natin because people use more airconditioning. And at the same time, we lose hydro-power. So far, we have been lucky this year. Sa Visayas, sapat din. Siguro we'll have an excess of about 200MW in the Visayas. We could have passed it to Mindanao if we were connected to Mindanao. But since we are not connected to Mindanao, at kahit na may excess power, we cannot sell it to Mindanao.

May shortage ba sa Mindanao?

Sa Mindanao, if you take into consideration that they need a spinning reserve of about 300MW, YES, they have a shortage. They are just lucky now. You know, you always have a spinning reserve depending upon the size of the biggest plant that might close. So if your biggest plant in Mindanao is 200MW, at biglang nasiraan, nagkaroon ng problema, you have this extra power in your reserve kaya maco-cover mo kaagad. Sasabihin mo, 'Start your plant right away.'

Right now, iyong shortfall nila, ilan?

If I include the 300MW reserve that they have and they have a shortfall of 300 MW, then they're just exact. In other words, kapag nasira ang isang generator dun, patay, rolling brownouts ang mangyayari sa kanila.

Iyan ang epekto nitong interconnection na ito?

Yes. Because you see, we have a 200MW or 300MW excess in the Visayas, we could have covered that right away, but we could not.

May epekto po ba ang nangyayari sa ibang bansa ngayon sa fuel supply natin?

So far, wala pa naman tayong supply problem because Saudi Arabia has promised to increase - it has so much excess capacity... Saudi Arabia has promised to increase its production up to 2Million barrels a day, covered ang Libya, which is producing about 900,000 barrels a day. Kaya okay lang. What I want to ensure is, let the supply chain continue. I don't care what the price is, price is secondary to me. But I want to make sure that the plants are running because we don't want any factory here to close down. The power cost component is only about 10% to 15% of the operational cost of a factory. So if you raise that by 1% or 20% of 15%, then that's only 3%, okay lang ang cost na iyan. But make sure that I have the power. Because the elevator close down, and the lights shut down, I can't go to work anymore.

Iyong interconnectiona project, nasa feasilbility stage pa lang daw?

No, they already have, they just have to update. It takes P91 million to upgrade the study done in 2002. Right then, the interconnect cost $350M, ngayon nasa $530M na. But we still need it.

Kelan matatapos iyan? Iyong project, iyong interconnection?

Sabi nila in 6 months, iyong study. The interconnection? It depends upon the approval from the ERC.

Submarine cable iyon di ba?

Yes. We've long had a submarine cable from Luzon to Samar. So, we've long had this interconnection. It connects Luzon to Visayas. We in Visayas can buy from Luzon. Pinapasa sa Visayas kung kulang. And backward now. Luzon is going to need an additional 300MW capacity. So Visatas can now send power to Luzon. It's Mindanao that has remained an island.

How long will it take to lay down the cables for the interconnection between Mindanao and Visayas?

It would take mga 8 years eh. That's why we told them that they would run out of power so they needed to connect now. But that's 10 years ago. Ngayon, wala, and that's another 8 years. Mas mahaba iyan, 283 kilometers iyan. It's not the submarine cable itself that's long, it's only about 20 kilometers. It's the connection all the way to Cagayan de Oro.

*** On Japan quake/OFW repatriation ***

Can we oblige the airlines to repatriate our OFWs?

No, we are not allowed to do that, we cannot do that. We promised them that it would be market-driven. In case of a super emergency, in this particular case, we have to pay for the plane. Now, how much was the estimate to send a plane to Crete? That's was about $1 million, for one Boeing 707, 1 round-trip.

Sa Japan, can we do that?

We can do that. But the problems is, they are not organized properly in Japan. You can't send a plane to Japan pagkatapos ang sasakay mga 30 lang. We have to fill the plane. Ang mahal noon, lalo na in a cost per head basis.

We believe that the danger, as long as they are not in the 30 kms radius, to the citizens of Japan and the visitors of Japan, the OFWs, is very, very minimal.

Sa nuclear power plant?

We have to reexamine that. Even the United States, Germany, England are now reexamining their nuclear plant policy. For me, the essential rule is: "There is no such thing as absolute safety." If you always want absolute safety, we will never even develop the airline industry. Because there is always an element of an accident. It's just the level of safety commensurate to the level of public acceptance. The advantage of Japan is that they are so advanced technologically, they have a culture of excellence, they do everything well. And even then, this happened to them. So we have to be a little bit more careful here, because we do not have the level of technology advancement, we do not have the culture of excellence that the Japanese have.

You know, tuwang-tuwa ako sa Japan, dito sa 50 volunteers from the nuclear plant who decided to stay there. They are being exposed to radiation. They are doing this for the country, for their company.

In our country, how many will volunteer? Wala! Nakatiwangwang ang nuclear plant natin...

Iyong Bataan Nuclear Plant natin, iyong BNPP?

We need to re-examine that. It would be awfully dumb if we rush it. Very hard to say na, 'Sge ituloy natin ang BNPP. That will not get public acceptance, that will be greeted with public indignation.

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