Power shortage holds back Mindanao growth
Subscribe Now February 04, 2013 at 02:26pm
The power shortage in Mindanao is one of the "most binding constraints" to the region's growth and development, according to the National Economic and Development Authority (NEDA). In a speech at the Philippine Development Forum (PDF) in Davao City on Monday, February 4, NEDA Director General Arsenio Balisacan said power outages are affecting business operations and other activities in the region, making it an unattractive investment destination.
Quoting the Department of Energy (DOE), Balisacan said the Mindanao grid will require additional power capacity of at least 394 megawatts (MW) over the next few years to meet the required reserve margin, and peak demand until 2016.
"One of the most binding constraints to realizing Mindanao’s economic potential is the energy situation. During the peak of the El Niño phenomenon in 2010, some areas experienced 8 to 10 hours of power interruptions which has severely affected business operations, not to mention home, school, medical and other activities," Balisacan said.
He said Mindanao holds a lot of potential in agriculture and tourism. He earlier said the region may grow faster than Luzon if its potential is realized.
The NEDA chief said Mindanao is a leader in the export of rubber, pineapple, banana, coffee and organic agriculture products overseas.
According to him, the region also accounted for 17% of Philippine tourist arrivals in 2011, a number that is expected to grow especially now that the Bangsamoro Framework Agreement has been signed.
To realize Mindanao's full potential, Balisacan said the following must be done:
put up additional power capacity that will serve off-grid areas in Mindanao
build farm-to-market roads
revive investor interest in the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN growth area
expand and rehabilitate sea ports
"I have always believed that Mindanao has so much economic potential that could spur higher growth for our country and contribute immensely in the attainment of the inclusive development agenda. To achieve this, we must address the critical constraints to this goal, as well as identify new players in the regions in order to increase and spread growth more equitably," Balisacan said.
Higher electricity demand
The DOE said electricity demand will rise in Mindanao as well as the Luzon and Visayas grids as the economy continues to grow.
Mindanao however will see the greatest demand, based on the agency's 2013 Electricity Supply-Demand Outlook.
The outlook report said electricity demand in Mindanao will grow by an annual average of 4.57% to 2,078 MW in 2020, and 3,250 MW in 2030.
"Mindanao grid is experiencing under generation since 2010. The large power plant built in the region is the 210-MW coal-fired plant, which was commissioned in 2006. The existing capacity in the region is composed of more than 50% hydroelectric power plant, which is dependent on the availability of water and affected by weather conditions. A total of 1,600 MW additional capacities are needed in the planning period to meet the electricity demand and the require reserve margin of the grid," the DOE report said.
In Visayas, electricity demand is projected to increase by an average annual rate of 4.52% or to 2,237 MW in 2020. There is dependable capacity of 2,037 MW in the grid, and it will need additional base-load and peaking capacities of 1,700 MW.
Electricity demand in Luzon will also grow by an average of 4.13% to 10,693 MW in 2020, and 16,477 MW in 2030. On top of the committed power projects in the grid, the DOE report said 8,100 MW of additional capacities composed of 6,000 MW base-load plant and 2,100 MW peaking plants are needed to meet the required reserve margin.
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