NGCP asked to invest in Leyte-Mindanao interconnection project

MANILA, Philippines - The Department of Energy (DOE) is urging the operator of the country’s power transmission highway, National Grid Corporation of the Philippines (NGCP), to invest in the multi-billion peso Leyte-Mindanao Interconnection Project (LMIP).

Energy Secretary Jose Ibazeta said NGCP should take part in the project to ensure stable supply of power in the grid.

“If you are talking about security, they (NGCP) should push the project through,” he said.

He said the project cost, however, will be a “pass through” charge, which means that the cost, upon approval of the Energy Regulatory Commission (ERC) will be passed on to consumers.

“We expect NGCP to undertake this project to help avert power shortages in the future,” Ibazeta said.

Industry sources said participation in the project will not be a problem for NGCP with the technical expertise provided by the State Grid of China Corp., the largest grid operator in the China, and financial strength of its local stockholders led by the group of Henry Sy Jr. and Robert Coyuito.

One Taipan Holdings Corp., controlled by Henry Sy Jr., bought out the 30 percent stake of Monte Oro Resources of businessman Enrique Razon in NGCP. 

The NGCP consortium also includes State Grid of China with a 40 percent share as the foreign partner, Monte Oro Grid Resources Corp. with 30 percent equity and Cayuito’s Calaca High Power Corp. with 30 percent.

On Jan. 15, 2009, state-owned National Transmission Corp. (TransCo) officially turned over the management and operation of its nationwide power transmission system to NGCP. The concession period is for 25 years, renewable for another 25 years.  

One Taipan acquired Monte Oro’s 30-percent share in NGCP for approximately $350 million.

Ibazeta also its said the Chinese investors in NGCP have been continuously upgrading its system to accommodate higher voltage capacity in its transmission lines.

“The Chinese are thinking of putting up voltage higher than in China.  But of course, this will all take time,” he said.

One of the crucial TransCo projects before the takeover of NGCP last year is the LMIP, which will complete the country’s grid loop.

This project is also envisioned to facilitate the start of the wholesale electricity spot market for Mindanao.

In 2006, TransCo’s board approved to include the LMIP in the list of ongoing projects from status being an indicative project. 

TransCo then was eyeing to tap various traditional financing sources like Japan Bank for International Cooperation (JBIC), Export-Import Bank and Calyon.

The TransCo board decided to bring down the cost of LMIP to $275 million just to get the project going.

The LMIP was supposed to be included in the list of projects the Asian Development Bank (ADB) will finance for 2003.  But the multilateral financial institution cancelled the project from its list after the government raised its intention to defer it.

With the privatization of TransCo, the government had opted to defer the LMIP to allow the new concessionaire to carry out the project.

The interconnection project was originally designed for a 250-kilovolt high-voltage density cable bipolar link with a total transfer capacity of 500 megawatts.

The project was supposed to include 455-kilometer long overhead line and 23 km submarine cable with a maximum depth of around 1,000 meters below sea level.

It emanates from the existing Ormoc converter station in Leyte and terminates at Kirahon Converter station in Central Mindanao via the Southern Leyte and Northeastern Mindanao . 

TransCo had also an proposed the fastracking of the implementation of the LMIP to 2008 from earlier scheduled 2011 to help resolve the imminent power shortage in Mindanao.