Freeman Cebu Business

With power supply assured, Cebu can move ahead

FULL DISCLOSURE - Fidel O. Abalos - The Freeman

Earlier this month, the World Bank, in its updated report, “lowered the Philippines’ gross domestic product (GDP) growth forecast for 2021 to 4.7% from 5.5% in March.” These growth forecasts’ revisions, according to the report, were primarily due “to the larger-than-expected economic contraction in the first quarter, the re-imposition of stricter quarantine measures in April and May in response to a surge in COVID-19 infections, and the lingering challenges from high inflation and losses in household incomes.” Simply put, the consequential stringent quarantine measures due to the resurgence of COVID-19 infections negated the early signs of economic rebound in the first quarter of the year.

In the meantime, according to Ndiame Diop, the World Bank’s Country Director, we just have to pin our hopes on the prospect of a “global economic rebound” and just celebrate on the possibilities that it will boost our exports of goods and services (BPOs) and labor (OFWs).  Then let those dollar remittances strengthen our economy. He simply stopped short of saying that while exporters (and their employees) and OFWs will salivate on these prospects, the rest will continue to starve. 

These factors considered, the Philippine Economic Update said that the economy is forecast to grow at 4.7% this year before accelerating to 5.9% in 2022 and 6.0% in 2023. But then again, COVID-19 will have a say on that.  

Indeed, World Bank senior economist Kevin Chua said that the Philippines’ “growth prospects hinge on the country’s ability to manage the pandemic.” But wait, apart from the pandemic, is the ongoing power interruption in Luzon considered in this forecast. To recall, earlier this month, the National Grid Corporation of the Philippines (NGCP) placed on, either red and yellow alerts at certain times, the Luzon grid, including Metro Manila. In simple terms, this means that there is power shortage.  And the usual remedy, rotational brownouts. 

This is something really serious. Why? Because the National Capital Region, Calabarzon and Central Luzon contribute 32.3%, 14.3% and 10.4%, respectively, or a total of 57%, to the country’s GDP. And this is happening while most factories are yet operating below capacity. So, simple math will tell us that as soon as they maximize their factories’ capacities, the problem will only worsen.  Therefore, even if we are able to contain the virus, our recovery efforts will still fare badly. Now, the question is, though they have a lasting solution to this shortage.

To recall, more than a decade ago, Mindanao was in the same predicament or even worse.   Reportedly, on February 23, 2010, Mindanao’s generation deficit posted its biggest single day rise to 358 megawatts. Consequently, due to frequent power interruptions, some residents had to use gas lamps.  Worse, businessmen had no other recourse but ran their factories with generators. Considering the prices of diesel then, factories in Mindanao had to bear the brunt of higher manufacturing cost. Thus, they had become less competitive. 

Fortunately, one of those that responded and established a coal-fired power plant was Aboitiz Power Corporation, through its subsidiary, Thermal South Inc. (TSI).  Situated in Toril, Davao City and one of the major players, it influentially helped address Mindanao’s power shortage.

What about us now in Central Visayas, Cebu, in particular.  Shall we suffer the same fate as that of Luzon? Remember, Central Visayas contributes 6.5% to our GDP. Though relatively small nationally, Cebu is the region’s biggest contributor. Therefore, if power shortages obtain in Cebu, the region’s economy suffers. 

The good news is, “Visayan Electric has assured its customers that the rotating brownouts that have happened in Luzon due to power supply problems will not happen in its franchise area.” President and chief operating officer Raul C. Lucero said that there is sufficient power supply in the Visayas Grid.  This fact is also confirmed by Department of Energy Region 7’s Engr. Jorey Maleza. 

As an added assurance, Visayan Electric, according to Mr. Lucero, has an “existing contract with a diesel power plant, Cebu Private Power Corporation (CPPC). With such power supply agreement, CPPC’s role is “to provide peaking and dispatchable power to Visayan Electric especially in times of tight grid supply.” Thus, even rotational brownouts can be avoided.

Certainly, therefore, we (in Cebu) can move ahead with our recovery efforts.


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