DOE eyes Malampaya funds for transmission

MANILA, Philippines — Transmission development projects such as the Visayas-Mindanao Interconnection Project (VMIP) is the top priority of the Department of Energy (DOE) for the use of the Malampaya fund, Energy Secretary Alfonso Cusi said.

The DOE is proposing to Congress to focus the use of the Malampaya fund on the construction of transmission projects, Cusi said.

“We are establishing a priority and the priority that we have mentioned is the [grid] interconnection of Mindanao to Visayas, and then the Negros to Cebu interconnection, also in Mindoro,” he said.

The Electric Power Industry Reform Act of 2001 (EPIRA) states the Energy Resource Development Fund, commonly known as the Malampaya fund, is reserved for energy resource development and exploration activities.

Electricity end-users will benefit from this since they no longer have to pay for that cost if Malampaya fund is used to finance those projects, the Energy chief said.

“It’s just that if it is the private sector will do it, the consumers will have to pay [for the cost of construction]. But if it’s from Malampaya fund, the cost will be shouldered by government and there will be additional cost to consumers,” Cusi said.

The National Grid Corp. of the Philippines (NGCP), the country’s transmission highway operator, recovers the cost of building new transmission projects from consumers through the transmission charge, which is being approved by the Energy Regulatory Commission (ERC).

Earlier, the National Transmission Corp. (TransCo) said the estimated cost of the VMIP is P52 billion. Another P2.6 billion is needed for the Antique to Mindoro transmission line, P7.4 billion for the Bohol-Cebu connection, and P1.9 billion to fasttrack the Panay-Negros line.

In particular, the VMIP, which will allow the sharing of excess electricity via submarine cables and overhead transmission lines, has been pending since the 1980s. 

Meanwhile, Cusi said the remaining balance of the Malampaya fund could be used to partly pay off the National Power Corp. (Napocor) debts.

Currently, PSALM has pending applications with the Energy Regulatory Commission (ERC) to recover stranded contract costs (SCC) and stranded debts (SD) amounting to P233.24 billion.

Several bills are pending in the Senate to use the Malampaya fund to pay for the stranded costs and debts of Napocor, but Sen. Sherwin Gatchalian said the said fund has a balance of P193 billion which is not enough to cover all of Napocor’s financial obligations.

SCC refers to the excess of Napocor’s contracted cost of electricity with independent power producers over the actual selling price of the output. On the other hand, SD refers to any unpaid financial obligations which have not been liquidated by the proceeds from the sales and privatization of Napocor assets.

These are passed on to end-users through the universal charge, a pass-on rate to consumers to cover the Napocor’s SD and SCC, missionary electrification and the environmental fund.