Pushing for a Mindanao Energy Solution

This is the Speech by Akbayan Representative Kaka J. Bag-ao for the Mindanao Consumer Summit: Mindanaoan’s Response to the Power Crisis at the Ateneo de Davao University, Davao City on May 11, 2012

To the various civil society groups, people’s organizations, stakeholders, and local officials present, maayong buntag sa inyong tanan.

Mindanao has been called the land of promise, and indeed it is true for the millions of people who reside in it. Aside from the rich natural and human resources as well as the diverse culture and tradition that it has, Mindanao also leads the way for the country in renewable energy by having the largest ratio of renewable energy in its energy mix comprising 60% of the power generated in the island. This has been made possible by harnessing the tremendous power of natural forces by damning rivers and tapping geothermal spots to generate electricity.

As a Mindanawon, like many of you who are gathered here, I also feel a sense of trepidation with the fate that the island has. The frequent power outages lasting for a couple of hours in some areas while lasting for six to eight in others has left many people in the dark, literally and figuratively. It has unnecessarily disrupted various social, economic, and cultural activities in the island. Mindanawons feel powerless, no pun intended, as some groups say they must swallow the bitter pill of higher electricity rates or accept frequent black outs. Instead of sitting back and accepting such a fate they had nothing to do with, Mindanawons are raising objections to such kind of proposals and have instead come up with their own solutions. And why not? If Mindanao is to face a power crisis, then it should be given the option to solve it.

I’m not an energy industry expert but the tireless work of various stakeholders in the power industry has made it clear to all of us that accepting higher electricity rates in order to avert blackouts is a false choice. There are other choices. But before that, let me first raise the following points on the whole issue of the power crisis in Mindanao. First, this current mess that the island can be traced to a faulty national policy on power. Second, its effects are felt not only by Mindanawons but also by the environment especially in the issue of mining. Third, that if any solution can be given for this power crisis it must be a solution grounded on addressing those previous points I mentioned and that such a solution must be a re-imagination, not only of Mindanao’s power industry but that of the entire country as well.

Okay, I know those points I raised are a mouthful, but do bear with me as I delve deeper into them.

More than a decade since Republic Act No. 9136 or better known as the EPIRA passed into law the promise of affordable power premised on the privatization of power industry assets and competition of power producers has failed to materialize. EPIRA was touted as a way for the country to pay off the huge debts of the state-owned National Power Corporation or NAPOCOR by privatizing its assets. Its proponents promised that NAPOCOR’s P943 billion debt could be paid off. Instead of being paid off, NAPOCOR’s debt increased by 1.24 trillion in 2009 from 943 billion in 2001 and in the process lost profitable power assets that generated tens of millions of dollars in income yearly. Many of these assets were sold at rates often favorable to the purchaser such as the Masinloc Geothermal Plant which had an $80 million dollar annual income and sold for $390 million with only a 40% down payment with the balance to be paid in seven years.

The promise of competition didn’t prove to be true either. Instead of competition, the power industry is now controlled by a few business interests many of whom own both the assets that produce power as well as the companies that distribute it. It is not uncommon that the companies operating power assets in some parts of the country are also power distributors in others. In fact one can simply mention four or five companies and these would account to more than half of the entire power industry. Simply put, how can anyone expect competition to bring the prices of electricity down if the production and distribution of power as well as the market prices of power are controlled by a handful of companies?

Instead of affordable power, consumers ended up paying more than twice the rates in just a decade. The end of state monopoly of the power industry opened the floodgates for oligopolistic control of the industry. Privatization benefitted groups such as San Miguel, the Lopezes, the Aboitizes, and companies owned by Manny Pangilinan but left the majority of electricity consumers at the losing end.

This oligopolistic control of the industry has also created further problems. With these big companies now exerting more influence on the country’s energy policy, they are now also exerting influence on other energy issues such as the kind of energy used and for what purpose it is produced.

Although the Renewable Energy Act of 2008 clearly spelled out the country’s policy for renewable energy like hydro, geothermal, solar and wind to have an increased share in the energy mix of the country to address environmental issues as well as to decrease dependence on imported fossil fuel, the half-hearted efforts from the government coupled with the strong lobby of certain groups arguing that renewable energy would cost more prevented the full take off of a strong renewable energy sector. In fact, many of these groups such as the Aboitizes presented coal energy, one of the most detrimental forms of energy in terms of health and environment, as a solution to the growing demand for energy.

In effect, we are being told that we should have clean and renewable energy but since we cannot afford it, we should settle for an energy source that will cost us even more causing damage to the environment and exposing us to health risks. Like the issue of privatization, we are being made to choose between two undesirable choices. It’s either we pay for expensive energy or damage our lungs and the environment. Well, we shouldn’t buy into that. Coal isn’t even proving to be affordable as it was promised.

Because coal is basically a non-renewable resource, it is no surprise that it is not really cheap, unless coal energy proponents discover a way to create coal circumventing Mother Nature’s process which takes millions of years to create coal, the prices will only go higher. It doesn’t make it any better that its generation cost is also subject to the fluctuations in the price of coal.

Coal energy has now expanded its share of the energy mix from 10% in 1991 to the current 30%. Its proponents raise two key issues, affordability and rising demand for energy, as an argument for the further increase of coal’s share in the country’s energy mix. From the current 10 coal-fired power plants in the country, more are set to be built. A coal plant project in Subic, led by the Aboitizes, is planned to generate 400 to 600 megawatts to stave off a power crisis in Luzon. Closer to home, Energy Secretary Rene Almendras unveiled plans for a 1000 megawatt capacity for Mindanao. But stakeholders in Subic and Mindanao have been left scratching their heads. Subic and Olongapo have no need for more power as it is being addressed by existing power plants in the area. Mindanao has a shortfall of only 100 megawatts, not 1000. So, who needs this extra power? There is growing suspicion that such a huge output in energy is needed to meet rising residential and industrial use as well as the growing mining operations in the country.Jean Marie Ferraris, from the Legal Rights and Natural Resources Center-Kasama sa Kalikasan (LRC-KsK) stated that “There is enough energy supply in the country if not for the mining industry.”

In Mindanao, the mining industry which already uses tremendous amounts of energy is driving this growth in coal energy. As a result, Mindanao must face greater environmental pressure caused by mining and coal power. Coal energy it seems, is a twin of mining, both create more damage than benefits. Both industries have pernicious effects on the environment. Mining contributes a paltry to the region’s share of the gross domestic product while taking a huge toll on the environment causing soil erosion, threat to biodiversity, and groundwater contamination. Coal energy is not much different; the amount of harmful gases it releases into the environment makes it one of the main causes of global warming. These two industries are mutually dependent. Mining drives the demand for coal energy while coal energy makes an expansion of the mining possible.

As the island of Mindanao continues to endure a power crisis, many of its people are left wondering what solutions can be made. Clearly, EPIRA has failed to deliver and the current trend in energy isn’t too promising. Mindanao is lucky in a way because its power sector was given a 10 year reprieve from EPIRA. However, with the current energy crisis gripping Mindanao, some groups have now come knocking on Mindanao’s door. Time is up they say. It’s time for privatizing Mindanao’s power assets they say.

To those who believe that the Agus-Pulangui hydro power assets must be privatized, that coal power must now fill a concocted 1000 megawatt demand, that privatization is the solution, and that renewable energy is a waste of money, Akbayan says, “Sorry, we beg to differ.”

Combining the proposals of various renewable energy advocates, people’s organizations, and Mindanao leaders a clear alternative is beginning to take shape. Instead of privatizing power assets, greater government control of the industry is gaining more and more supporters. Instead of dirty and expensive coal energy, renewable energy such as hydro power is seen as the strongest answer. What is even more important to this alternative solution is the growing clamor for people’s participation in how their power is made, used, and managed. Indeed this is real people power.

It is noteworthy that during the recent Mindanao Power Summit attended by President Benigno Aquino III, various stakeholders in the region from the local government officials to civil society organizations pushed for returning government participation in the industry. Many proposed the creation of a “Mindanao Power Corporation” to manage the various energy assets in the region with the end goal of making the people of Mindanao responsible for their own energy needs. This is a clear rejection of control of the power oligopoly in Mindanao.

Another component of this alternative solution is focusing on renewable energy. Instead of abandoning hydro power, we must rehabilitate these power assets, starting with the Agus-Pulangui hydro power plant. Dredging of the heavily silted rivers together with upgrading of its facilities will ensure affordable and renewable energy will remain as a bedrock of Mindanao’s power production. Added to this is the need for investing in other renewable energy resources such as geothermal, solar and wind. Small scale operations of solar energy have shown positive results that run contrary to allegations that renewable energy is expensive. It also noteworthy that Mindanao, which is strongly opposing coal, is also opposing mining. Mindanao will not allow coal power and mining to take off at the expense of the region’s environment and health.

Also, important is the need for citizen’s participation in the different levels of the power sector. Mechanisms for consumers to take part and have a say in how their power is sourced and distributed means that the public will no longer become passive actors in the power industry. This also means accountability and transparency is ensured and practices that tend to raise the price of power are prevented. In effect, the promises that EPIRA made will be fulfilled in spite of it.

Mindanao is no longer just a land of promise. The Mindanawons who challenge the imposition of higher rates, dirty energy, and privatization have clearly laid out an answer not only for the Mindanao power crisis but also for the future of the Philippine power sector. Indeed, Mindanao must show that there is another way.

Daghang salamat.

Photo by interaksyon.com