Developers asked to invest $25B in renewable energy

The government is calling green developers to invest about $25 billion (roughly more than P1 trillion) over the next 17 years to triple the country’s renewable energy capacity.

The Department of Energy (DOE) plans to ramp up renewable energy development in the country which has been hobbled by various oppositions and uncertain policy mechanisms in the past.

“We are 84 percent dependent on fossil fuels in terms of power generation and yet 10 percent of our population does not have access to power as of the moment,” said Marissa P. Cerezo, assistant director of the DOE’s renewable energy management bureau.

“Energy self-reliance is a goal of every country, and with the huge amount of energy resources in the country, I think these resources would play a major role in displacing fossil fuels and eventually attaining our goal of being self-sufficient,” she added.

The energy department is eyeing to triple the country’s 2011 renewable energy capacity of 5,400 megawatts (MW) to 15,400 MW by 2030.

According to Cerezo, the average investment needed for the construction of a renewable energy project in the country currently stands at $2.5 million per MW.

With the government’s target of adding some 10,000 MW of renewable energy generation over the next 17 years, the private sector would have to pour in about $25 billion in fresh investments to make the DOE’s plan achievable.

Cerezo said that by 2020, the country’s renewable energy capacity should have already reached the 10,000-MW mark more or less.

The energy official further said that the DOE is optimistic that the said target will be attained by 2030.

For one, she said that the feed-in-tariff (FIT) mechanism has already been put in place to encourage renewable energy development in the country.
The FIT promotes investment in renewable energy by the government offering long-term contracts to producers. The goal of feed-in tariffs is to offer cost-based compensation to renewable energy producers, providing the price certainty and long-term contracts that help finance renewable energy investment.

“We are confident because we have plenty of renewable energy resources and there are a lot of interested developers,” Cerezo stated.

However, a recent joint study conducted by the World Wide Fund for Nature (WWF) and the World Resources Institute (WRI) pointed out that the government would have to go beyond “targets and plans” if it wants to ramp up renewable energy development in the country.

The study revealed that the Philippines is lacking the push for its renewable energy plans, thus it remains lagging behind in terms of renewable energy implementation worldwide.

Cerezo, for her part, admitted that there are indeed numerous challenges which the DOE is facing in its move to boost renewable energy development in the country.

Among these hurdles, she said, include the perception of unrealistically high cost of renewable energy, complexities on obtaining permits, lack of trust from banks that would support renewable energy projects, and uncertainty of grid access.

“To address these challenges, we need to intensify information drive for renewable energy promotion and we need cooperation and assistance of the academe and our affiliated renewable energy centers all over the country. We have to continue enhancing our coordination with other government entities as well,” Cerezo said.

source:  Malaya

NEDA okays 6 PPP projects worth P76B

The National Economic and Development Authority (NEDA) Board approved six public-private partnership projects the other day totaling  P76.560 billion, Presidential Spokesman Edwin Lacierda said yesterday.
Lacierda said two of these projects were approved with conditions which include the P5.91 billion Philippine Ports and Coast Guard Capability Development Project under the Department of Transportation and Communications (DOTC) and the P27.5 billion Philippine Rural Development Project under the Department of Agriculture.

The Philippine Ports and Coast Guard Capability Development Project involves the procurement of four brand new 24-meter patrol boats and an 82-meter patrol boat which the Coast Guard expects to be delivered to the country in December and in 2014 respectively.

Philippine Rural Development Project aims to increase farm and fishery productivity and the incomes in the targeted program areas through the adoption and integration of climate-smart and resilient agriculture support, technologies, tools and systems; and to have a more market-oriented, climate-resilient agro-fishery sector.

The project will be implemented in the next six years in 80 provinces spread out in the 16 regions and would be done in coordination with the World Bank and the Global Environment Facility.

The other projects that were approved were the P21. 672 billion Market Transformation through Introduction of Energy Efficient Electric Vehicles Project that would be undertaken by the Department of Energy; the P9.419 billion that would be carried out by the Department of Education; and the P6.749 billion Change in Scope of the Post-Ondoy and Pepeng Short-Term Infrastructure Rehabilitation Project (POPSTIRP); and the P5.541 billion Pasig -Marikina River Channel Improvement project, both by the Department of Pubic Works and Highways.

The NEDA Board approved the modification of the Market Transformation project after project cost was raised to $504 million from P500 million following the $4 million grant from Clean Technology Fund (CTF) for the solar charging stations.

The Education project aims to improve equitable access to complete basic education and ensuring its quality; and build and sustain an effective, transparent and engaging governance of education. The two main components of the project are improving teaching and learning, and strengthening systems.

The POPSTIRP involves the use of a P461.2 million savings to implement 15 sub-projects which included eight flood control and seven road and bridges sub-projects in the areas of Pampanga, Tarlac, Nueva Ecija, and Cagayan.

The Pasig -Marikina River Channel Improvement project involves the second phase of the project which involves the construction and improvement of revetment, parapet wall and appurtenant drainage improvement works along the Pasig River, from Delpan Bridge up to the immediate vicinity of the Napindan Hydraulic Control Structure (NHCS), including design modification of river wall improvement works.

source:  Malaya

Energy investors rate PH prospects as best

Investing in energy is now more rewarding in the Philippines.

The country ranks among the most attractive countries worldwide – actually third out of 30 countries – for investments in both renewable energy and conventional energy, an analysis by a global consulting firm showed.

The analysis, titled the Energy Investment Map made by PA Consulting Group, revealed that the Philippines belongs to the top countries globally where investors would find the best opportunities for energy investments.

The Philippines notched high scores in PA Consulting Group’s energy index which rates countries according to anticipated internal rates of return and associated risks.

The Philippines ranked third out 30 countries, behind India and Poland which topped the ranking, driven by a massive demand for new conventional power capacities.

The country was ahead of countries like Turkey (ranked seventh) and Saudi Arabia (ranked 10th).

According to the analysis, conventional generation like coal is still an attractive prospect in Asia-Pacific, driven by lower fossil fuel prices and the need for additional generation capacity across the region.

It also said many of the top countries in conventional generation investment are characterized by fast-growing demand for power combined with regulatory regimes that enable long-term contracts for power from new projects.

The study showed that the Philippines’ position in the conventional energy index is boosted by its high scores for gas and coal which reflects the country’s need for additional generation capacity.

“Most of the generation build underway in Asia-Pacific is conventional – combined cycle gas turbines (CCGT) and coal. This is a reflection of low coal prices, anticipated lower gas prices, and the nascent renewable support policies in the region,” said Steve Thornton, an energy expert at PA Consulting Group.
Meanwhile, the Philippines also ranked fifth out of 30 countries in the renewable energy index, besting countries like the United Kingdon (ranked sixth), New Zealand (ranked ninth) United Arab Emirates (ranked 20th), and Saudi Arabia (ranked 22nd).

PA Consulting said the country’s position in the renewable energy index is lifted by its scores for wind, hydro and geothermal. All three technologies score highly in terms of investment potential, it added.

China heads the renewable energy index, followed by Sweden, Denmark and Austria which ranked second, third and fourth, respectively.

 “The Philippines is in need of new generation capacity, and with the introduction of Feed in Tariffs and an incoming Renewable Energy Market, renewables offer an attractive investment prospect,” Thornton said.
PA Consulting Group’s Energy Investment Map aims to help businesses and investors identify the best countries and technologies where they might look for investment opportunities.

The study, which took place between March and May 2013, included 14 European countries namely Austria, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Norway, Poland, Spain, Sweden, Switzerland and the UK.

It also covered 16 additional countries like Australia, Brazil, China, India, Malaysia, Netherlands, New Zealand, the Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Turkey, UAE and the US.
PA Consulting is a global firm which has experts in energy, financial services, life sciences and healthcare, manufacturing, government and public services, defense and security, telecommunications, transport and logistics.

source:  Malaya

PPP project retains interest

TWO CONGLOMERATES -- Metro Pacific Investments Corp. (MPIC) and Ayala Corp. -- remain interested in Cavite-Laguna (CALA) Expressway project despite changes in the public-private partnership (PPP) deal’s bidding terms, senior officials of both firms said separately yesterday.

“Yes, we will pursue,” MPIC Chief Financial Officer David J. Nicol said in a text message when asked if the company would still bid despite changes.

“We are interested in CALA and [we] will look into the details as soon as bid documents are finalized,” John Eric T. Francia, Ayala’s managing director and head for corporate strategy and development, said in a separate text.

Public Works Undersecretary Rafael C. Yabut last week said deadline for submission of qualification documents for the P35.5-billion project, originally set last June 10, was moved to a still undetermined date as the government decided to remove the P15-billion official development assistance component that was to finance the state’s participation in the project.

In a telephone interview yesterday, PPP Center Executive Director Cosette V. Canilao said the “government ‘could be out’ of the project as the DPWH (Department of Public Works and Highways) is still finalizing bidding parameters.” The private sector will be the one undertaking the segment originally intended for the government, she explained.

The CALA Expressway project involves construction of a 47-kilometer (km) highway that will connect the Manila-Cavite and South Luzon (SLEx) expressways. As originally planned, the private sector was to finance, design and build the P19.7-billion, 28.9-km Cavite section from Kawit to Aguinaldo Highway in Silang, while the government was to finance, design and build the P15.8-billion, 18.1-km Laguna section from the Aguinaldo Highway to the SLEx Mamplasan exit in Laguna.

Ms. Canilao said the move was meant to avoid “integration risks.”

“Some of the interested parties were concerned that their revenue projections might be affected if the government fails to deliver its part on time,” she explained.

Officials of other parties earlier identified as being keen on the project -- San Miguel Corp. and the Villar Group. -- were not immediately available for comment.

Ms. Canilao last week said revision of terms was encouraged by the success of the P15.8-billion Ninoy Aquino International Airport (NAIA) Expressway project. San Miguel -- the winning bidder -- offered P11-billion payment to the government on top of construction cost. San Miguel made the P11-billion payment early this month.

MPIC and Ayala Corp. have been active participants in the government’s flagship infrastructure program.

Ayala in September 2011 bagged the P1.96-billion Daang Hari-South Luzon Expressway Link, the first PPP project to be awarded by the Aquino administration.

Ayala and MPIC have teamed up to bid for the P60-billion expansion and operation of the Light Rail Transit Line 1 (LRT-1) and the P1.72-billion automated fare collection system (AFCS) for Metro Manila’s light railways. The Ayala-MPIC partnership was pre-qualified to bid for those projects.

Ayala and MPIC, with their respective consortia, were also pre-qualified to bid for the P17.5-billion project to expand and operate Mactan-Cebu International Airport.

Bidding for the LRT-1 project is set for next month while auction for AFCS and Mactan-Cebu airport projects will be in August.

The second PPP project awarded by the government was the P16.42-billion PPP School Infrastructure Project Phase One that was bagged last year by the Citicore Holdings Investment, Inc.-Megawide Construction Corp., Inc. and BF Corp.-Riverbanks Development Corp. consortia; while the third one was the NAIA Expressway project that was awarded last month to San Miguel.

Yesterday, shares of MPIC added five centavos or 0.93% to P5.43 apiece, while those of Ayala gained P13.50 or 2.35% to close at P587.50 each. MPIC is the local unit of Hong Kong-based First Pacific Co. Ltd., which partly owns Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a minority stake in BusinessWorld.

source:  Businessworld

PPP -- profits before people

THE PRIVATIZATION mantra is being incessantly hummed by the Aquino III administration. Privatization is being promoted to the public as the solution to deteriorated, broken-down and inadequate public utilities and social services. The argument is not new: government just doesn’t have the resources to provide for these public goods. Coupled with this line is the conventional wisdom that governments are prone to mismanagement and corruption so much so that only private capital investment and management could solve the problem.

Thus the so-called public-private partnership or PPP has become the centerpiece economic program of Mr. Aquino. He, however, is merely taking a leaf from his mother, former President Corazon Aquino, who implemented the first build-operate-transfer (BOT) scheme for the power sector in the country in 1987 when the Philippine economy was subject to the conditionalities of the structural adjustment programs laid down by the International Monetary Fund. PPP projects are basically BOTs with a new, fancier title.

The privatization of the Metropolitan Waterworks and Sewerage Service (MWSS) in 1997 is considered to be the country’s showcase for such schemes. It was the largest water privatization project in the world at the time costing close to $8 billion. The Ramos government touted the project as the answer to the water crisis in Metro Manila and adjoining areas promising lower rates, better quality water, universal coverage and a more efficient use of scarce water resources. Filipino firms owned by the Ayalas and Lopezes (and later, the Consunjis and MV Pangilinan group of companies when the Lopezes divested) partnered with foreign investors from the US, France, UK, the Netherlands, Japan and China/Hong Kong to successfully bid for these contracts.

The move was immediately met with opposition, spearheaded by the MWSS Employees’ Union who unjustly stood to be displaced by privatization, supported by consumers who anticipated higher water rates once this vital public service is subjected to the bottom line of big business -- profit.

In two years’ time however, water rates began their steady and steep climb, especially so with rate rebasing that took place every five years. By the 1st quarter of 2013, water rates were 7-12 times higher than pre-privatization rates. This year the rate increase is already under negotiation between MWSS, the government regulatory body, and the two concessionaires: Manila Water is asking for an increase of the basic charge by ₱5.38 per cubic meter (m3); Maynilad, by ₱10.30. Together with other charges such as 12% VAT, environment charge and foreign currency differential adjustment, this adds up to a hefty increase of ₱7.81/m3 for Manila Water and ₱13.71/m3 for Maynilad.

What does this mean for consumers? According to the national democratic alliance, BAYAN, one way to look at it is to compute the increase in monthly water bills for a low monthly consumption of 10 m3 and a "high" of 30 m3. This rate hike will range from ₱78.10 to ₱234.30 for Manila Water and ₱137.10 to ₱411.30 for Maynilad per month. But the real impact is revealed by comparing such increases with family incomes, especially of the more economically disadvantaged.

To illustrate, assuming the daily minimum wage in the National Capital Region (NCR)is at ₱419-456, the water bill to be charged by Maynilad for 10 m3 monthly consumption would be 3-4% of an ordinary worker’s earnings while it would be 2-3 % for Manila Water. At 30 m3 consumption, the figures are 10-11% for the former, 7-8% for the latter.

Such calculations were confirmed to even be underestimated in a study conducted by the policy research outfit IBON in four urban poor communities in NCR. Water connections cost anywhere between ₱1,300 and ₱10,000 and effective water rates are ₱20-75/m3 (for sub-metered connections) and ₱63-₱333/m3 (for water bought in containers). The community is populated by kasambahay or household workers, pedicab/tricycle/jeepney drivers, construction workers, vendors, security guards and janitors with daily earnings of ₱100-400 or ₱3,000-12,000 monthly. The portion of their earnings that goes to paying for water is anywhere between 7-22% (at an income ₱100-150/day) and 3-15% (income ₱300-350/day).

Quite starkly, the wealthy households in Ayala Heights, Quezon City pay roughly the same rates as those in the slum area nearby who are fortunately connected to the water main. Those poorer households that make do with sub-meters pay several pesos more per cubic meter consumption while those who pay for water by the balde containers pay three to five times more. Thus the poor have to pay for their water at astoundingly higher rates than the rich do because the water reaches them through middle men.

Which brings us to ask what ever happened to the private concessionaires’ claims that they had achieved close to a hundred percent coverage of their franchise areas? According to IBON, the most recent representative survey data for access to safe water in the entire country including NCR is from the 2008 Annual Poverty Indicators Survey which makes it difficult to cross check the water concessionaires’ claims. (It is also an unflattering indication of how assiduous is the government in compiling data relevant and necessary to its regulatory function.)

Nonetheless, the official data shows that upon privatization (1997), the percentage of families without access to safe water was 12.2%. Post privatization (2008), it stood at 8.4%. On the other hand, the rising absolute numbers of households without access to safe water, from 201,117 to 204,036, is cause for alarm.

BAYAN says that not all households have individual connections; in urban poor communities, most rely on bulk meter connections that result in higher rates. In many areas water pressure is low such that water flows only at specified, and even ungodly, hours. In fact the physical infrastructure for water supply in many areas still appear to be antiquated resulting to the bursting of water mains that caused flash floods in thoroughfares and residential areas such as those at EDSA in 2010, Las Piñas in 2012 and Mandaluyong in 2013. It would be useful for a study to be made comparing the incidence of water-borne diseases in NCR pre- and post-privatization.

Most useful data culled by IBON is the robust profits garnered by Maynilad and Manila Water from 2008-2011, a 44% average annual increase for Maynilad and 15% for Manila Water. In fact the two water companies have been able to expand: Manila Water owns Boracay Island Water, Clark Water, Laguna Water and Kehn Dong Water Supply at Ho Chi Minh City, Vietnam; Ayala & Pangilinan, for their part, have cornered the Cebu Bulk Water project.

To check whether the water firms’ profits are indeed quite healthy, perhaps even unconscionable from the point of view that the commodity they are profiting from is one so vital to life, health and wellbeing, IBON estimated their respective rates of return on equity (ROE) or how much the company is earning from funds invested by its stockholders: Maynilad’s is 48%; Manila Water, 19%. These figures are reportedly higher than those of companies in the telecommunications, power and mining industries.

At the end of the day, this only underscores that with privatization, water firms controlled by the biggest names in the local and foreign business community are raking in their profits and government gets its similarly gargantuan tax revenue, while the poorest and middle-income households are bled dry.

With the privatization of water services considered to be the model for the PPP program of the Aquino regime, the common tao is in for a lot more hardship and misery, all for the glory of private profit. Looming just around the corner is the privatization of government hospitals, starting with the National Orthopedic Hospital.

It is as if we are not suffering enough from the unending increases in electric power rates and oil and gasoline prices, the Aquino regime would want us to believe that the best this government can offer is more of the same.

source:  Businessworld's Streetwise by Carol Araullo

PPP to check natgas pipeline viability

CLARK FREEPORT ZONE—The probability of constructing a natural gas pipeline from Batangas to Manila is set to be determined this year, Zenaida Monsada, director of the Oil Industry Management Bureau of the Department of Energy (DOE), said on Thursday.

Monsada said the Philippine National Oil Co. (PNOC) has tapped the Public-Private Partnership (PPP) Center to conduct a feasibility study for the proposed Batangas-Manila (Batman 1) natural gas pipeline.

The DOE official said the study is targeted for completion within the year or by the first quarter of next year.

“The study will also include the terms of reference for the bidding, the engineering, procurement, and construction of the project,” Monsada said.

The 105-kilometer Batman 1 natural gas pipeline is estimated to cost between $100 million to $150 million and is eyed for completion between 2015 and 2017, if proven feasible.

The project, which will be undertaken by the state-owned PNOC, is seen to jumpstart the natural gas industry in the country.

The idea is to tap the PPP Center’s pool of international consultants who can “provide an international perspective” for the project, the energy official said.

PPP Center Executive Director Cosette Canilao said the PPP Center will tap funds from the agency’s Project Development and Monitoring Facility (PDMF).

The fund is intended to be used for the preparation of pre-feasibility, feasibility studies, and tender documents for PPP projects, and assistance in the bidding process.

“PNOC has tapped the PDMF to undertake study and structuring of the Batman project, for a possible PPP,” Canilao said.

The PPP Center was tasked under the Executive Order No. 8 series of 2010 to facilitate the coordination and monitoring of the PPP programs and projects in the country.

source:  Malaya

Only one qualifies for MRT-3 projects

Only one proponent has qualified to bid for two key Metro Rail Transit (MRT3) projects -- the P712-million Temporary Maintenance Provider and the P25-million supply and delivery magnetic tickets.

According to the Department of Transportation and Communications (DOTC) Bids and Awards Committee (BAC), only Autre Porte Technique (APT) Global, Inc. qualified for the next stages of the bidding process for MRT 3 temporary maintenance provider project, after the other two bidder were disqualified.

“APT Global submitted a bid in the amount of around P685 million. Financial proposals of the two other interested groups were no longer opened after they were found to be ineligible,” said DOTC spokesperson Miguel Sagcal.

The disqualified groups were Asiaphil Manufacturing Industries, Inc. in joint venture with Korea Railroad, which did not comply with sealing and marking requirements of Republic Act No. 9184 (the Procurement Law); and Commbuilders and Technology Philippines Corporation, which failed to submit a certificate of satisfactory performance.

“Unfortunately, it once more came down to two groups’ failure to comply with the bid requirements. Time and again, we have said that the DOTC-BAC can do nothing but to follow the Procurement Law, which prohibits it from exercising discretion,” Sagcal added.

source:  Malaya

SMC pays P11B for PPP project

San Miguel Corp. (SMC) said on Wednesday it has paid the P11 billion it committed itself to when it won the bidding for the right to build the Ninoy Aquino International Airport (NAIA) Expressway.

Through its subsidiary Optimal Infrastructure, SMC topped the bidding for the second Public-Private Partnership project of the government after promising to pay P11 billion upfront to construct the expressway.
Ramon Ang, SMC president, said it now awaits the government to comply with its commitment to provide the road right of way as well as project design, after which the company will start construction.

“Immediately after they’ve provided the design and ROA, we will construct it quickly,” said Ang on the sidelines of San Miguel unit San Miguel Properties Inc.’s stockholders meeting.

The seven kilometer, four-lane expressway will connect NAIA to Pagcor City in Paranaque City, while linking two existing expressways, Skyway and the Manila-Cavite Toll Expressway.

It will have entry and exit ramps at Roxas Boulevard, Macapagal Boulevard, and Pagcor City.

Ang also said his group expects the completion of a share sale by unit Philippine Airlines within the month in order to comply with the Philippine Stock Exchange’s 10 percent minimum public float.

Ang, without providing details, said the sale will be facilitated by PNB Capital.

Meanwhile Presidential Spokesman Edwin Lacierda said yesterday that traffic rerouting schemes would be enforced to ease congestion and minimize inconvenience to motorists during construction.

He said they hope to complete the construction of the expressway in time for the Asia-Pacific Economic Cooperation (APEC) summit in 2015. with Jocelyn Montemayor

source:  Malaya