Visayas faces massive brownouts with more delays in Napocor’s linkup project

There will be massive brownouts in the Visayas region in 2003 if the controversial $50-million (about P1 billion) Leyte-Cebu upgrading Interconnection Project continues to face delays, a ranking National Power Corp. (Napocor) official said.

The official, who requested anonymity, said among the provinces that would be directly affected would be Cebu, Panay and Negros.

Aside from the power outages in these provinces, the official said the government will be forced to pay a total of P20 million a day for stranded capacity and fuel cost due to non-delivery of electricity from the Philippine National Oil Co. (PNOC) geothermal plant to the Visayas grid because of the absence of the Leyte-Cebu interconnection facility.

"We have to bear with the take-or-pay cost everyday of the PNOC if this power will not be delivered to the Visayas grid. The question here is who will be accountable for the losses and the possible power outages in Cebu, Panay and Negros. Who will take the blame?," the official asked.

The official noted that the country is cash-strapped and can’t bear more losses. "Who will shoulder these costs? We have financial difficulty. We don’t want this issue to add to our burden," he said.

It was learned that National Economic and Development Authority (NEDA) recently recommended to the Cabinet a re-tendering of the three-cable project of Napocor.

Using a procurement strategy, Napocor argued that it auctioned out the Leyte-Cebu project last May 2000 based on two-cable bidding with an option to bid for the third cable. The bidding procedure, which was already approved by ADB, is being questioned by NEDA.

The Cabinet wants the Department of Finance (DOF) and the NEDA to convince the ADB to conduct a re-bidding for the project.

But, Napocor believes that a re-bidding is disadvantageous to it.

The official said that the ADB loan allocation was already reduced to $64.45 million from the original $104.5 million based on the results of the bidding in May 2000 which was won by Sumitomo Corp.

Based on the results of the bidding in May, Napocor was able to fetch the lowest bid of $53.5 million, of which $43.5 million will cover for the two cables and $9.9 million will be for optional bid for the third cable.

The Napocor official pointed out that the proposed re-bidding of the project might result to insufficiency of ADB funding.

It was also learned that the ADB is not likely to approve the NEDA’s re-bidding proposal since it already affirmed the validity of the earlier bidding.

It will be recalled that when President Arroyo took over last February, she ordered the review of all the contracts to be entered into by her government.

The project, which should have been completed in 2002, is likely to be delayed again by another year due to this predicament between the Napocor and NEDA.

This means that the government will have to bear another P3.6 billion in losses if this project is delayed for another year. But worst prime Visayas provinces like Cebu will be left with no power in 2003.

The Leyte-Cebu project is part of the 1997 Philippine Development Plan of the Napocor and was approved by the Napocor board as early as February 1995.

The project is aimed at meeting the energy requirements of the Visayas grid through the most cost-effective means and to reduce dependence on imported energy such as coal.