Malampaya fund can’t be used to buy generators, says Osmeña

Sen. Serge Osmeña III. INQUIRER FILE PHOTO

MANILA, Philippines—Senator Sergio Osmeña III has ruled out tapping the Malampaya fund to buy or rent modular generator sets to avert power rationing via rotating brownouts in the summer of 2015.

Osmeña, chair of the Senate’s energy committee, said Congress passed the Electric Power Industry Reform Act (Epira) precisely to stop the government from interfering in the power industry.

“We’re not supposed to be intervening,” he told reporters. “Our people have to learn how to live by free market rules. Everybody wants freebie. And you find out later on the government gets into financial trouble.”

Besides, the proceeds from the Malampaya natural gas field off Palawan were specifically set aside for energy development, not for energy subsidy, he added.

Any fund to be used to contract additional generating capacity should be sourced from the national budget, Osmeña said.

“They can get it out of the national budget,” he said. “For goodness’ sake, you don’t know how much money the President has at his beck and call.”

President Benigno Aquino has asked Congress to pass a joint resolution authorizing him to contract additional generating capacity of 200 megawatts to 500 megawatts.

The shortage in the summer of 2015 could peak up to 900 megawatts, which could translate to seven to eight hours of rotating brownouts from March to June as a result of expected drought brought about by the El Niño weather phenomenon, power plant outages, and delays in the commissioning of new power plants, according to Energy Secretary Jericho Petilla.

An additional capacity of 300 megawatts will cost the government at least P6 billion, if leased, and P10 billion, if purchased, he said. The cost will be passed on to consumers.

In last Thursday’s Senate hearing, Petilla added the option of tapping participants in the so-called “interruptible load program” or ILP.

Under this setup, the government could either ask big businesses get off the national electricity grid and use their own generators to supply their own power needs, or buy the excess generating capacity of big businesses to add to the grid, Petilla said.

Seator Francis Escudero, chair of the Senate finance committee, said the government should consider subsidizing consumers when it finally contracts additional capacity.

“After all, we still have fiscal space for that,” he said.

Petilla had said the government would use the Malampaya fund to contract the additional generating capacity.

In a November 2013 ruling, the Supreme Court struck down a provision of Presidential Decree 910 allowing the President to use the Malampaya fund for non-energy related projects.

The Malampaya fund represents government revenues in the form of royalties as well as taxes from the natural gas obtained by a consortium of oil companies from the Malampaya gas fields off the west coast of Palawan.

PD 910 created the Special Fund to finance energy resource development and exploitation programs and projects of the government and “for such other purposes as may be hereafter directed by the President.’’

As of last year, the fund totaled P137 billion, according to the government.