The vision of ‘power’

A number of households in Metro Manila still do not have electricity because of fallen electric posts and cables (a number of which were stolen by cable thieves), with Meralco’s crews working nonstop to repair distribution lines damaged by Typhoon Glenda. However, a more serious concern is the availability and reliability of power supply, with the specter of rotating brownouts in Metro Manila due to the lack of generating capacity as power plants, particularly those in southern Luzon, are unable to deliver power to the grid. Power plants in northern Luzon were also down for one reason or another and, thus, were unable to deliver the needed supply.

Certainly, the aftermath of Typhoon Glenda has made it clear that the inability of generation companies to deliver supply at a time when power is critically needed underscores the necessity for the country’s biggest electricity distribution company Meralco to put up its own power plant to supply the Luzon grid – as this will remove the dependence of the distribution utility and consumers on third party power generation companies.

Independent power producers, power generators and spot market players get 58 centavos for every peso spent by consumers for electricity usage, and Meralco can make a big difference if it has its own power plant because it will be able to deliver a reliable and affordable supply of electricity to consumers, an observer affirmed.

As early as 2011, studies from the DOE and the University of the Philippines show that starting 2015, one 500 MW power plant needs to go online every year to produce and supply power to the Luzon grid. We’re told Meralco PowerGen plans to develop a diversified power portfolio of up to 3,000 MW until 2020 which is part of an overall strategy to help ensure sustainable power generation. To date, its power generation projects in development include the 600 MW Redondo Peninsula power plant in Subic which is slated for completion next year but has been stalled by a still-unresolved Writ of Kalikasan case in the Supreme Court.

Last March, businessmen already called the attention of government over the power supply problem in the Philippines which they described as already at a critical stage. As usual, Malacañang was in denial mode saying there is no supply problem in Luzon and Visayas, and that everything will be normalized in Mindanao by 2015. Business groups like the Philippine Chamber of Commerce and Industry, PhilExport, AmCham, the European Chamber of Commerce, etc. wrote the President saying “Luzon now needs 600 MW and thereafter 300 MW per annum, Visayas needs 150 MW and some 150 MW per annum, while Mindanao needs 300 MW and about 120 MW per annum to meet desired regional economic growth targets.”

Businessmen also lamented the lack of vision as far as power security is concerned, saying “no clear and specific supply sources are in sight, other than those various ‘commitments’ being undertaken on a best-effort basis.” It has become apparent that “the deficiency cannot yet be sufficiently addressed, with the problem to be ‘most glaring in Mindanao, where the earliest foreseeable time when new significant capacity can come in is not until 2015,’ they said.

(Wealthy) Russians are leaving

The threat of additional sanctions is spreading fear among the social and business elite of Russia, with many now thinking of ways to quietly get their money out of the troubled country since the policies of President Vladimir Putin could result in the collapse of the $2-trillion Russian economy within six months. Putin’s actions over the situation in Ukraine has already triggered international condemnation, but the downing of a Malaysia Air jet that killed 298 passengers (including three Filipinos) has driven anti-Putin sentiment even further, with strong evidence suggesting that Russia supplied the surface-to-air missile used by pro-Russian Ukrainian rebels to shoot down the Malaysian aircraft.

According to sources, “traditional sanctions” had already been imposed by the US and members of the European Union, with top level Russian officials and defense companies (such as Kalashnikov, maker of the AK-47 automatic rifle) finding their assets frozen. However, the fresh round of sanctions could have wider-ranging consequences since it involves so-called “sectoral sanctions” that target vital sections of the Russian economy, particularly banking as well as oil and gas that accounts for almost 25 percent of Russia’s GDP.

A gas company said to be partly owned by a Putin crony was barred from making new deals in the US debt markets with banks not allowed to hold its debt for more than 90 days – causing the gas company’s shares to plummet, cutting its market value by about $3 billion in just two days.

Analysts say Russian banks already have a difficult time raising domestic capital, and restricting access to foreign capital will certainly limit their ability to do business. Although a big number of wealthy Russians disagree with the 61-year-old Putin, they are keeping silent due to fear of retribution from the former KGB colonel who has been ruling Russia with an iron fist. Some critics are already calling Russia a rogue state, slamming “Czar Putka” for the seeming lack of remorse over the downing of the Malaysian plane.

Not surprisingly, the UK and the Netherlands are pushing for more sanctions because among the victims of the MH 17 tragedy are 10 Britons and 193 Dutch. A former Russian official affirmed there is serious cause for business to be afraid since the threat of new sanctions across a wide sector of the economy is “very real.” Russian businessmen are now “in horror” because of the potential economic fallout, with many anticipating the situation to get even worse.

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