Transco gets $850-M budget for five years

The Department of Budget and Management (DBM) has approved the $850-million five-year capital expenditure of the National Transmission Corp. (Transco) in view of concerns that a trimmed budget could compromise the country’s power supply.

Transco president Alan Ortiz said the restoration of the company’s original proposed budget for 2006 to 2010 will enable it to pursue critical transmission projects for reliable electricity supply.

Transco earlier proposed to the DBM a $1.3 billion budget from 2005 to 2010. The DBM, however, reduced this to $500 million. Eventually, Transco convinced the DBM, to raise the budget to $850 million in preparation for the bidding of the Transco concession contract next month.

Transco will be privatized through a 25-year concession agreement which can be renewed for another 25 years subject to performance conditions.

Ortiz said the approved budget would also translate to more transmission development projects. Earlier, leaders of Southern Mindanao appealed to President Arroyo to reinstate Transco’s budget and prioritize the construction of the $75.6-million Kirahon-Maramag (Bukidnon)-Bunawan (Davao) 230- kilovolt (kV) transmission line to avert a looming power crisis in the area. The Maramag-Bunawan transmission line was originally planned for completion by December 2006 but budget constraints forced Transco to move the completion to December 2007.

As a result, Southern Mindanao is faced with the possibility of electric power shortages. Currently, power supply in the region is transported using two power barges which, as a provisional remedy, is very expensive.

"Transco’s proposed budget capital expenses, specifically that for the Maramag-Bunawan transmission line, must be restored. Southern Mindanao’s power supply must be stabilized, for it to retain its attraction as a consistent net exporter, dollar earner for the country," said concerned government and private sector representatives in an open letter to President Arroyo. Southern Mindanao, which has been growing at a steady growth of seven percent annually, accounts for at least 46 percent or 566 megawatts (MW) of the 1,228 MW total peak demand of Mindanao.

Southern Mindanao’s power generating capacity is estimated at only 505 MW or 89 percent of its present peak demand. Most of the Mindanao grid’s dependable capacity is found in Northern Mindanao, primarily through the hydroelectric power plants in Iligan.

However, Northern Mindanao cannot utilize all its excess capacity as its total peak demand of 366 MW is presently being met by the hydroelectric plants in Iligan.

The excess power from Northern Mindanao can be diverted to Southern Mindanao through the Maramag-Bunawan transmission line.

The situation will be further aggravated as unless the power generated in Northern Mindanao, is transferred to Southern Mindanao the National Power Corp. (Napocor) will be paying for electricity that it cannot sell.

Transco is fasttracking 23 major transmission line and substation projects in Mindanao worth P5.7 billion to keep pace with the region’s increasing demand for electricity and stave off threats of a power crisis.

Ortiz noted that in the last four years, Mindanao’s peak demand growth averaged 5.8 percent with demand for power delivery services increasing by 8.86 percent from 2003 to 2004. The country’s average peak demand growth for the same period is at 4.32 percent.

The industrial and commercial sectors in Mindanao, particularly in key growth zones, have been asking Transco and Napocor to put up additional power generation and transmission lines in the region, saying their industries’ momentum cannot be sustained if there are inadequate power facilities.

Transco is currently constructing seven substation capacity-addition projects worth P330 million in Iligan City, Zamboanga del Sur, Misamis Oriental, Surigao, and Davao, all of which are expected to be completed by year’s end, said Ortiz.