Press Release
March 28, 2012

TRANSCRIPT OF SEN. SERGE OSMENA'S PRESS CONFERENCE

Q: Ano po ang napag-usapan niyo ni Secretary Almendras sa meeting niyo?

Serge: Pinag-usapan lang namin 'yung problema sa Mindanao. Pero matagal na po naming pinapag-usapan 'yun, since 2 years ago. Sapagkat ako ay chairman din ng Commission on Appointments Committee on Energy, I sponsored his nomination to the secretary-ship. At na-kumpirma namin siya.

Noon pang April 2010, nung kumampanya po tayo sa Mindanao bilang senatorial candidate, diniretso ko na ang mga taga-Mindanao. Sapagkat nagkaroon ng brownout -- Davao, Cagayan de Oro -- kung saan ako nagpapa-interview, nagkaroon ng brownout dun sa television station at radio station, mga 2 to 4 hours. At diniretso ko po ang mga kapatid natin sa Mindanao, kasalanan natin ito, sinabi na po namin sa inyo na magkakaroon ng power shortage noon pang 2001, nung pagpasa po namin ng EPIRA. At ayaw ninyong maniwala, humingi po kayo ng 10-year exemption sa privatization ng Napocor plants at in-explain na namin sa inyo, in-explain na ng mga international consultants po namin, na wala pong papasok na investors dito sa Mindanao kung magkaroon po ng competition against government-owned plants. Sapagkat 'yung gobyerno po pinapababa ang presyo ng planta. 'Pag sinabi ng presidente na ibaba niyo yan para maging popular ay pinapababa. Alam niyo po, 1 power plant, one 200MW coal plant will cost between $200M to $300M. Napakalaki po ng capitalization niyan. At humihiram po sila sa bangko. So ang nangyayari po, tinatanong ng bangko kung saan nila ilalagay ito. 'Pag sinabi na dun po sa Mindanao, ang sagot ng bangko, eh teka muna, masyadong malaki ang political risk dun sapagkat sinabi ng gobyerno, which at the time owned about 70% of the installed capacity of Mindanao and exempted from privatization, 'pag sinabi ng presidente na ibaba ninyo ang presyo, eh 'di wala na kayo, hindi na kayo makikipag-compete. The cost at the time was about P3.50/kwh, and government was selling at P2/kwh. So, ang ginawa po namin ay we implemented the new regime, that's why we call it the Electric Power Industry Reformed Act of 2001 because it was to institutionalize reforms in the electric power industry. Noon po, ang Napocor lang, ang government lang, ang nakakapagtayo ng planta. Pero alam naman natin na nauubusan ng pera ang gobyerno saka napakasama po ng management kung government facility. So, we saw the problems during Tita Cory's time, nagkaroon po tayo ng mga 8-hour brownouts dito sa Luzon, ang daming nagmumura dun. Pagkatapos during Ramos time, the Congress passed the Emergency Power Crisis Act allowing the government to contract for new plants without bidding. 'Yun Nagkaroon tayo ng problema din dun sapagkat naging over-priced po ang presyo, pagkatapos ng double order pa. So, double whammy ang Philippine economy, tapos nagkaroon po ng controversy tungkol sa purchase power cost, IPPs -- independent power plants, mga planta na binabayaran namin ng power even if we don't use it. Ngayon, na-absorb na din 'yun sapagkat parati lumalaki ang ating GDP, our economy grows, and as our economy grows, we are able to absorb the excess powers.

Now, about 15 to 16 years later, we have absorbed and we have seen new plants being brought in by the private sector. Maski 'yung mga government plants na binili ng private sector, has been ran very efficiently. Marami akong nakitang planta na 'yung 150MW capacity, in the hands of Napocor nasa 100MW na lang eh. Tapos pagbili ng private sector ina-upgrade nila kaagad at nagiging 150MW na uli. So, these are the inexpensive ways to expand the energy na nandiyan na 'yung planta, just bring it up to its capacity by rehabilitating.

Dun po sa Mindanao, because government still owns about 60% to 70% of the total output, talagang kukulangin sila sapagkat 'yung private sector papasok lang dun hanggang sa demand curve, hindi sila sosobra. Sabi nila, paano natin mabebenta ito kung sosobra tayo. And these are big investments na hindi sila basta-basta papahiramin ng bangko. They will not be able to obtain financial close under circumstances like that. So, we warned the people of Mindanao and mga kaibigan kong kongresista dun, I said, 'You know, you're going to be in trouble, spoiled naman kayo.' But, number 1, ang assumptions natin dito ay, the Constitution provides that the waters, minerals of the public domain belong to the Filipino people, it does not belong to the people of a region. Gaya dun sa Leyte. Napakalaki po ng geothermal field nila pero hindi masasabi ng mga taga-Leyte na, 'Uy amin 'yan ha, huwag mong kukunin 'yan.' Hindi po. That's being sold in Luzon. That's being sold in Panay. That's being sold in Cebu. Dito din po sa Luzon, nakikita din naman po ninyo. Ang Magat dam nabenta na. Ang Ambuklao dam, ang Binga dam, nabenta na. San Roque dam, nabenta na. Wala namang umiiyak na, 'Uy, para sa Ilocos lang 'yan kasi nasa Ilocos lang ang Magat dam.' Hindi po pwede ang ganyan. Atsaka hindi magiging efficient ang distribution ng electric power.

So ang sinasabi ko po sa ating mga kapatid sa Mindanao, 'We have tried our best, we have planned ahead. Because the power industry has to be planned 10 to 20 years in advance. Hindi po pwede na makakabili lang tayo ng Eveready battery diyan kung kukulangin po tayo ng power. Hindi po pwede iyan eh. It takes 3 to 5 years to build a plan. From concept, land prep, getting all the permits, signing up the contract, achieving financial clause, and construction. Napakahaba po ng planning period niyan at ang construction period.

And so, ngayong nagkaroon na nga po sila ng power shortage, sinasabi nila ngayon walang ginagawa ang gobyerno. Hindi po, meron pong ginagawa ang gobyerno. Kawawa naman si Sec. Almendras, he's one of the best secretaries that we have. The problem is 'yung resistance dun sa Mindanao na huwag ibenta 'yung Agus-Pulangi plant. Eh sabi namin, it will not work under the market-driven, competitive regime under the EPIRA. Ang sinasabi po namin, tingnan mo ang Luzon, wala ng brownout. Visayas wala ng brownout. Kayo lang ang may brownout sapagkat ayaw niyong sumunod sa sinasabi namin.

Ngayon, in 2001 din, may plano na ho na ikonekta 'yung Leyte sa Surigao, so that will link Visayas and Luzon to Mindanao. Ngayon po sa Visayas meron po kaming surplass na 380MW, ang kulang sa Mindanao, 200MW to 250MW. Kung meron lang po nung koneksyon, eh di na-supply na namin 'yun at hindi na sila magkakaroon ng brownouts. Gaya ngayon, kung may shortage sa Luzon, Visayasn throws towards the Luzon. And kung mayroong shortage sa Visayas, kunwari down ang isang planta na ire-rehad for repairs, Luzon can supply the Visayas. So, the bigger the grid, the more efficient it. And not only that, it's cheaper. Sapagkat 'pag bumibili tayo ng power plant, dapat may reserba na 20% to 30% 'yan. Hindi pwede na 'yung demand ko 1300MW, gaya sa Mindanao, eh I only need 1300 MW. Hindi po. Kailangan natin ng 1400MW to 1500MW because you are always ready. Like for example when 1 or 2 plants break down, magkakaroon din ng kuwan...or they have a regular maintenance, every year mine-maintain 'yan eh, sina-shutdown 'yan, meron kang reserba. And every year, the Loss of Load Estimate (LOLE) should be zero. In other days, what is the estimate in the load in the coming days in the coming year you would lose power. Alam nila 'yan . Dapat talaga zero. In Mindanao, it's now 200 days a year, LOLE. Next year, it would be 240 days. Ang sinasabi ko sa kanila, alam mo, okay lang kung bahay-bahayan lang ang kuwan natin...pero ang mga pabrika ninyo, ang mga cold storage ninyo, ang mga manufacturing facilities ninyo, mga planta dun, cement plants, they need power. Eh sino ang papasok dito kung nakikita nila, 'Oops, maybe you have power this year pero next year, you might now have power. Hindi ako magtatayo ng planta diyan. Teka muna. Masisira lang mga utilities ko. Masisira lang ang mga makinarya ko. San ako kukuha ng power?'

Q: Ano ang kailangan nilang gawin?

Serge: The people of Mindanao have to accept that they will have to face higher rates, a little bit higher, by about 50 centavos. It will not be so high kung siguro Nagkaroon na ng coal plants dun, 'yung mga baseload plants na mumurahin. Ngunit ngayon na kailangan nila ng emergency power, kasi nasa ICU sila di ba, umiiyak na sila, they will have to make do first, temporarily for about 2 years, with CCGP -- 'yung Combined Cycle Gas Turbine. 'Yan ang P9/kwh, but that will only take up about 10% of their consumption. So kapag binlend mo 'yung average rate, it will go about from about P3.70/kwh to P4.20/kwh. And they are always complaining. Pero wala tayong magagawa. Ang gusto nila i-subsidize. Eh teka muna. Ang mga kapatid natin sa Luzon at Visayas hindi nila na sila subsidized.

Q: Ano po 'yung CCGT?

Serge: Ito 'yung mga power barges. These are for emergency uses. These are barges that you will use for 1 to 2 hours, not more than 4 hours, a day. Kasi mahal nga 'yan. But if you're only using it for 2 to 4 hours a day, i-blend mo sa regular rate mo at makikita mo sa bill mo naman na ang average na binabayaran mo per kilowatt hour will come out to about P4.20 if you use them. If not, they are about P3.70/kwh sapagkat may mga diesel plants dun. Ang pinakamura dun, P2.90/kwh, 'yung tubig, 'yung hydro, 'yung galing sa Angus at Pulangi. 'Yung ginagamit nilang coal atsaka diesel, umaakyat na P3.70/kwh ang average nila.

Q: Ang iaangat ng power rate, how much po? Fifty pesos or fifty centavos?

Serge: Fifty (50) centavos. The P3.70 to P4.20/kwh.

Q: Ibig sabihin kailangang i-shoulder ng mga taga-Mindanao 'yung mas mahal na kuryente para magkaroon sila ng sufficient power supply?

Serge: Opo. Sapagkat tinanggal po namin sa EPIRA 'yung per grid subsidy. Noon po before the EPIRA, hindi po ninyo ito alam, lahat ng taga-Manila sina-subsidize ninyo the rest of Luzon. May add-on na mga 24 centavos 'yun. Tapos the rest of Luzon subsidizes the rest of Visayas and Mindanao. Hindi ninyo alam 'yun. So mas mababa po ang rate dun at mas mataas ang rate dito sa Mega Manila. Pinatanggal po namin 'yun para magkaroon na ng competition and true cost of power na ang magre-reflect sa power bills ninyo.

Q: Sa House po nag-file na si Rep. Biazon calling for the grant of emergency powers to PNOY at sa Senate po, magfa-file naman daw po si Sen. Trillanes...

Serge: Yes I have heard of that. But I don't know what emergency powers those are. Because all the powers are there already. As a matter of fact, when I was with Secretary Rene (Almendras), ang sabi ko, if the president wants emergency powers, he can have it. But emergency powers to do what? You cannot build a plant overnight. The only plants that are available to cover the shortfall in Mindanao are the power barges of Napocor, the power barges of Therma Marine, and unless we use them, lalaki ang brownout schedule ng Mindanao. Right now, Mindanao is suffering from 1 to 3 hours of brownout everyday. Walang 8 hours dun. It's only 1 to 3 hours a day, depende kung nasaan ka. We can bring that down by June to 1 hour a day lang if they use the barges.

Q: Gusto lang nila na i-fasttrack 'yung negotiation process, give way to negotiated contracts...

Serge: What will we buy? You know, I am asking my colleagues to please study the problem. We will have a hearing on April 19, everybody is invited. Pero anong bibilhin nila kung hindi power barges? 'Yun lang naman ang available.

You see, maski 'yang power barges... let me cite an example. Merong mga 3 barges dito, ang may-ari Duracom, nagsu-supply sa Meralco. Kung dadalhin po 'yun dun sa Mindanao, it will cost P400 million per barge. 'Yung paglipat lang ha. Sapagkat pagpunta dun sa Mindanao kailangan magkaroon pa ng transmission connection, ng subtransmission station, magkaroon ng pier para ma-angkla 'yung power barge. And it would take about 8 months. So there is no emergency that we can harness through special powers given to the president.

Q: Sir, ano po ba ang immediate solution, to use the power barges na available dun ngayon?

Serge: 'Yun ang sabi nila. 'Yung power barges. Hindi naman nila alam na it takes time for the power barges to even be brought there. Hindi parang motorboat iyan na madali lang, na i-stock mo lang 'yan sa Cebu o kaya sa Bohol... hindi po ganun yan. These are very complicated pieces of equipment, they cost millions and millions of dollars, and hindi basta-basta lang na sinasakay sa barko at dadalhin sa Mindanao. You have to sign a contract with them. Siyempre, tatanungin nila, anong gagawin ng barge ko dun eh gumastos na ako? Bigyan mo muna ako ng contract. And the average rate for the barge, for the power barge power, is about P9/kwh, it's not P14/kwh. Hindi ko alam kung san nakuha 'yang P14/kwh. And if they'll only use it, let's say 10% of the time, then it will only bring up your rate by 50 centavos/kwh. Talagang mahal, walang gagamit ng power barge for their daily needs. They will not use that in Manila, except Meralco uses it for emergency peaking hours, 'yung mga 1 to 2 hours, from 1 o'clock to 2 o'clock, or 6 o'clock to 7 o'clock, yan yung tinatawag na super peak. Dun lang po ginagamit ng Meralco. Pero aside from that, they will not use the power barge.

Q: So sir, ano ang pinaka-immediate na solution?

Serge: The immediate solution is for the electric cooperatives of Mindanao to cooperate sapagkat ayaw nilang bumili ng power na galing sa power barge. Parang mga spoiled lang sila, ang gusto nila ang gobyerno, through Napocor, will be the one to operate the power barge and sell to them at P3/kwh. Ang sabi ko, teka muna. Luging-lugi na nga ang Napocor. We just found them for P4 billion to cover their deficit sapagkat ang Napocor nagsa-subsidize ng mga island grids na hindi connected sa main transmission grid, like Palawan, Mindoro, Marinduque, Romblon, Bantayan Island, Camiguin, Biliran, Basilan, Jolo, Tawi-Tawi, Sulu. 'Yan talagang sina-subsidize kasi ang mga power plants dun is producing power at about P11/kwh to P12/kwh and they are selling it at a subsidized rate at P7/kwh. So ina-absorb ng Napocor 'yun. But that's what goes to our universal charge, and every Filipino pays for that. And since nalulugi pa rin ang Napocor so we have to give them an additional P4 billion every year just for the SPUG -- the Small Public Utilities Group, those are the island groups, the off-grid. So, we cannot, the whole country cannot afford to subsidize Mindanao because Mindanao is so big. Napakaliit ng mga small island grid dito. Siguro ang total installed capacity diyan hindi aabot ng 200MW to 300MW. Eh Mindanao already needs 1300MW.

Q: Nakipag-usap na po ba ang DOE sa mga electric coops sa Mindanao?

Serge: Well, everybody has to cooperate. May problema galing sa mga local governments -- pinapahirapan ang mga bagong planta, 'yung permit, license, etc. We have to ask them to cooperate. As a matter of fact, I have talked to 2 or 3 developers; 2 of them are willing to put a coal plant in Mindanao. First problem, 'yung Greenpeace. Huwag daw magpatayo ng coal plant. Patay na kaagad. Eh kasi that is the kind of plant na kailangan ng Mindanao, ang tawag dun baseload plant. This is the plant that keeps on running 90% of the time throughout the year. But that will only cost you about P5/kwh. Pero 'yung mga planta na nakikita ko ngayon, napakalinis. They have used modern facilities, what they call clean coal technology. It's really been so clean that we can invite them, point to any coal plant in this country, dadalhin ka namin dun at inspeksyonin mo, napakaganda. At maski 'yung coal mine ng Semirara, 'yung Semirara coal, it's so clean. Matutuwa ka. So, these are things na sinasabi ng mga Greenpeace, I admire Greenpeace, they are doing good things, but huwag naman sumobra sapagkat if we don't have power, there will be no investor. The investors will not come in, there will be no jobs. And if that's what Mindanao wants, then we cannot help it anymore. So dapat naman i-educate ng ating mga kapatid na congressman dun, na for a little sacrifice, for a little pain, you'd get a lot of gain. And it happened already. Mabuti kung experimental lang. Pero hindi naman experimental. Nangyari na dito eh. We've had the EPIRA in place in Luzon and the Visayas for 10 years, 11 years na. And we are not running short of power. As a matter of fact, maganda ngayon ang patakbo ng mga planta. Sa nakikita ko, I was studying their output, siguro 20% improvement over the time when it was being managed by Napocor.

Q: Sa present situation, no need for the emergency powers?

Serge: No. Everything that has to be done can be done without utilizing emergency powers. Because, number 1... we also met this afternoon with the owner of Iligan diesel, that's a 100MW plant na nagkaroon ng COA problem. Kasi nagkaroon ng utang ang Napocor, when it was running it, hindi binayaran 'yung real estate tax sa Iligan City, kinasuhan ng Iligan City, nanalo 'yung Iligan City, binigay ng Napocor 'yung planta sa Iligan City, at kinontra naman ng Iligan City sa Alcantara and Sons, or Conal Holdings, ito 'yung power arm ng Alcantara group. May nag-question ngayon, teka muna, bakit walang bidding. Eh Nagkaroon ng Swiss challenge. Natalo 'yung nag-challenge. So dapat in-award na iyon. It's still in court. Alam mo naman dito, pag nasa korte ka, slow down talaga, eh 2 years na 'yan.

So, we talked to Mr. Nick Alcantara, chairman po 'yan ng Conal Holdings, and he is willing to do everything to cooperate. Binigyan na kami ng schedule. O sige, eto, if you'll allow us to operate today, by next we will deliver 15MW, the month after that we will deliver 30MW, hanggang umabot na on the 10th month, it would reach 100MW. But there's no immediate solution. As a matter of fact, next month, isha-shut down yung Pulangi sapakat silted na 'yun eh. Every year dine-dredge 'yun eh. Halos wala na 'yung dam. Siguro 'yung dam dun good only for 8 hours na lang 'yung tubig, after 8 hours mauubusan na ng tubig.

Secretary Almendras has been doing a fantastic job. He had re-ordered many, 'yung mga nag-expire na contract, mas mababa pa ngayon. Hindi lang niya binubuga, hindi lang niya ina-announce. But he has brought down our power rates.

Q: Counter-productive 'yung calls for him to resign?

Serge: Sino ilalagay mo diyan? Sige sila na lang. Napakahirap, napaka-complex nitong industriya ng elekstrisidad. It's the most complex industry. I am chairman of the committee on banks and public services before, chairman of agriculture...this is the most complex. Eh nag-workshop nga ako sa Amerika nung 2003, 5-day workshop, hindi junket, workshop talaga the whole day. Ganun din ang problema nila. You know, advanced na sila pero they have the same type of complexities that we face here.

Q: So Sec. Almendras is the best for the position?

Serge: Yes. He is one of the best energy secretary that we ever had. Except that he is not a politician so he doesn't know how to brag about what he does, he just does it.

Q: Is there any way na magbabago ang isip ng electric coops sa Mindanao?

Serge: I hope the president can talk to them. Because I think the president has to step in. He has to talk to members of Congress from Mindanao, the local government officials, the electric cooperatives, and the people of Mindanao. At tama 'yung sinabi niya yesterday, please share the burden naman. The rest of the Filipino people, they are already paying 2 costs of power. The grid rate of Napocor last year and this year in Luzon is P5/kwh, in the Visayas, it's P4/kwh. In Mindanao, it's P3/kwh. Huwag natin pag-aawayan 'yung 50 centavos per kilowatt hour. Ang kelangan talaga 'yung long-term planning. At pag hindi nabenta po yung Angus-Pulangi, wala pong papasok diyan. Kaya nabenta na namin lahat ng planta ng government dito. Ngayon, pwede ng pumasok 'yung mga private investors dahil alam nila na wala ng mag-bu-bully sa kanila, walang magdidiin sa kanila na ibaba mo 'yang presyo mo. Magkakaroon ng competition. So, if you observe the prices in the WESM, Weighted Electricity Spot Market, it's lower than the grid rate. Lahat ng sobra tinatapon dun. At nagiging P3.80 ang grid rate ng WESM. Dun din sa Visayas, ayaw muna nila sa WESM hanggang 2 years ago ano. Yung WESM mahirap yan, magpapataas ng presyo yan. Hindi po. Ngayon, mas mababa pa yung WESM price kesa sa contracted price. Bakit? Lahat ng sobra dun po tinatapon. Kung meron kang generator sa likod ng bahay mo, puwede mong itapon sa WESM, kikita ka. It's a very efficient way to have a pooled market for electricity. And very transparent. Parang stock market 'yun, ina-announce sa Board how many kilowatts available from what plant at what price...

Q:

Serge: Hindi naman 100% ang source of power mo galing sa power barge, siguro mga 10% lang kasi Mindanao is short lang by about 15%, mga 200MW out of 1300MW, pwedeng i-plug yung gap na yun.

Tataas ng 50 centavos. It will be about P4.20, much lower than the Luzon grid rate. So hindi ko alam kung ano ang kino-complain nila.

Q: So what's the solution? For them to pay the higher rate na lang?

Serge: Yes. Because the most expensive power, sabi nga, is no power. If you have no power, you have no business, if you have no business, you have no job. That's the most expensive power.

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