PCCI welcomes creation of Mindanao Power Corporation

By Apipa P. Bagumbaran

Friday 18th of May 2012

CAGAYAN DE ORO CITY, May 16 (PIA) -- The Philippine Chamber of Commerce and Industry (PCCI) has expressed its support to the move of the Mindanao Development Authority (MinDA) for the creation of Mindanao Power Corporation (MinPoCor).

“We are one with the MinDA in this proposal,” said Ricardo C. Juliano, PCCI Vice President for Mindanao. He said the Agus-Pulangi hydro plants are Mindanao’s patrimony and it should be in government hands.

MinDA Chairperson Luwalhati Antonino told members of the press on Tuesday that President Benigno S. Aquino III has instructed her to study the viability of the recommendations during the recent Mindanao Power Summit, which included the setting-up of a government-owned and controlled entity that will operate the hydroplants in Mindanao in lieu of the National Power Corporation (NAPOCOR).

She said she submitted her report to the President last May 14, showing the viability of the proposal and detailing the profitability of the hydro plants based on the NAPOCOR's financial statements.

“Our numbers would show that if it is run by Mindanawons as a GOCC, then we will be able to pay the debts that are attributable to Mindanao grid, maintain low prices, and even provide about P200 million annual budget for the protection of watersheds around the hydro plants,” she emphasized.

She also reiterated her previous statement that the hydropower complex earned P68 billion or an annual average of P6 billion since 2001.

MinDA has issued a press release last May 9 reacting to the statement Power Sector Assets and Liabilities Management (PSALM) President Emmanuel Ledesma, Jr. regarding the reported losses of up to P15 billion between 2001 and 2011 from its operation of the government’s power assets in Mindanao.

In the press release, Antonino said PSALM’s financial statement validated Mindanao stakeholders’ stand that indeed the operations of Agus and Pulangui facilities had resulted in operating profits as was presented during the Mindanao Power Summit.

Citing the financial report of PSALM, the MinDA reported that Agus and Pulangui earned P68 billion net income but it was used to cover operating losses of other government facilities such as coal, geothermal and diesel-fired plants which accumulated a net loss of P83 billion over an eleven-year period, resulting in an overall loss of P15.03 billion for government power assets in Mindanao.

“PSALM, however, failed to state that P15.03 billion was not an actual loss because of what is called depreciation expenses or non-cash item amounting to P16.35 billion. Under strict cash basis accounting policy, factoring this yields P1.32 billion real net profit,” Antonino explained.

She also cited an item on amortization totalling of P5.679 billion for the 210 MW STEAG coal-fired power plant in Misamis Oriental which should not be computed as part of losses since this represents capital lease amounting to P1.089 billion annually since 2007 onwards until 2032, when the coal plant built under BOT scheme shall have been turned over to the government.

Meanwhile, the PCCI expressed concern on the need for affordability of power rates in Mindanao. “The ASEAN integration of economy will start by 2015 and by that time we will become a big local market,” he said.

Once we are integrated, we will not just compete for investments with Luzon and Visayas but also with everybody else in the ASEAN region, thus, we need to have competitive power rates vis-à-vis the ASEAN countries, Juliano said.

The PCCI is, however, optimistic that the integration will provide more opportunities for Mindanao in terms of cultural aspect especially that majority of the ASEAN market are Muslims. (APB/PIA-10)