TransCo tapping Malampaya fund for Vis-Min grid

MANILA, Philippines - The National Transmission Corp. (TransCo) is seeking President Duterte’s clearance to tap the Malampaya fund to build the long-delayed Visayas-Mindanao grid connection, its top official said.

TransCo president and CEO Melvin Matibag said the state-run firm is preparing a draft memorandum and executive order for that purpose.

“We will justify why it should be TransCo, instead of NGCP (National Grid Corp. of the Philippines) [doing the Visayas-Mindanao grid interconnection project],” he said.

If it is allowed to use part of the Malampaya fund, the cost of building the project will not be charged to consumers, he added.

“If TransCo will build the interconnection project, there will no longer be a pass-on cost to consumers since funding will be sourced from the Malampaya fund,” Matibag said.

Currently, only Luzon and Visayas are interconnected while Mindanao is isolated. Interconnection between Luzon and Visayas allows both grids to get supply from each other in times of supply shortfall.

NGCP, which clinched a 25-year concession to run the country’s transmission network, said it has completed the hydrographic survey determining the viable location for the Visayas-Mindanao grid interconnection which is along the country’s western seaboard – beginning in Cebu and terminating in Dipolog — and would cost to around P52 billion.

It targets to complete the project by 2020, as directed by the Department of Energy (DOE).

But TransCo said it is studying whether government can pay for the P52-billion cost of the interconnection project.

However, Sen. Sherwin Gatchalian said the decision on who would build the project should be based on what would be cheaper and would give more benefits to consumers.

And while the grid interconnection is energy-related, Congress still has to clarify where the fund can be used to prevent anomalous dealings, the lawmaker said.

 “We’re looking at passing a law to clear it up because there are a number of interpretations on the use of Malampaya fund,” Gatchalian said.

The Malampaya project is operated by Shell Philippines Exploration BV and Chevron Malampaya LLC with PNOC Exploration Corp. as a minority shareholder.

The service contract provides for a scheme in which the government gets 60 percent of the earnings after deducting certain charges.

However, proceeds of the project were reportedly diverted to spurious beneficiaries, including non-government organizations associated with suspected pork barrel scam mastermind Janet Lim-Napoles, which were investigated by Senate.