Mindanao needs additional energy projects

MANILA, Philippines - Mindanao needs power investments in three years time as demand will quickly take up the perceived oversupply in the region, according to an official of a major industry player.

Investment appetite is expected to surge in the region given the ample amount of electricity available, Alsons Power group executive vice president and COO Tirso Santillan said.

“Fast growth is possible…if you build [power plants], they will come. We think, there will be an oversupply but it will probably be short-lived,” he said.

 “People just need to be assured that there is power,” Santillan said.

Mindanao is now enjoying 1,000-megawatts of electricity supply surplus on account of the entry of baseload plants, particularly coal fired facilities that have come online starting this year and will continue until 2018, according to Mindanao Development Authority and the multi-sectoral Mindanao Power Monitoring Committee.

In particular, Aboitiz Power Corp. described the oversupply situation as “serious” which leaves little room for development for more power facilities in the region.

However, Santillan said the oversupply scenario anticipated by some power players will only last shortly given the strong take-up from incoming power-intensive developments.

“That means, in our estimation, there will still be an oversupply but it will only last for about three years.

Three years from now,” he said.

Santillan said he expects peak demand growth to expand by as much as 10 to 12 percent.

“In general, the growth of power is correlated with GDP (gross domestic product) growth. Mindanao has been one of the fastest growing regions in the Philippines so we think that three percent is very small even with GDP growth rate of seven percent,” Santillan said.

“In our growth scenario, what we think is a medium growth scenario. It’s about between 10 and 12 percent per annum,” he added.

Growth will come from all sectors – residential, commercial, and industrial – driven by the availability of power.

“There will be a combination of residential growth which means more appliances. There’s also commercial demand in Mindanao so there will be new commercial areas that could be developed. There will also be industrial growth. This is quite apart from the growth that comes from new projects,” he said.