As hydrocarbon fuel production peaks and the cost of coal, oil and gas increase, many countries that rely on these fuels will have problems powering their energy grid.
Such is the case in the Philippines where over 75% of their electricity production is from hydrocarbon fuels. The Philippines National Power Corporation (Napocor) may have to shut down over 270 power stations due to a budget shortfall, which will affect hundreds of thousands of households.
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The National Power Corporation (Napocor) on Friday warned of outages affecting more than a million households (1.3m) next year if its budget is not augmented.
Under the 2023 National Expenditure Plan submitted by the budget department, ₱32.2 billion is allocated for Napocor. Its original request was ₱44.7 billion.
At a Senate budget hearing, Jenalyn Tinonas of Napocor’s Financial Planning, Budget and Program Review Department, said the government-owned and controlled corporation needs the additional ₱12.5 billion budget to fully fund its operations for next year.
Without it, Napocor sees the shutdown of 278 existing power plants by the end of July 2023. A total of 458,283 households in Luzon, the Visayas, and Mindanao would be affected.
“Because the budget for our diesel fuel will only cover January to July 2023 operations,” Tinonas explained.
She added that the lack of funding could delay payments to various New Power Providers and Qualified Third Parties, resulting in outages hitting 834,285 households.
Senator Sherwin Gatchalian, who presided over the hearing, said close to 1.3 million households going dark is a “cause for concern.”
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“All the poorest, farthest, and hardest to reach areas are serviced by the NPC,” Gatchalian told reporters.
During the hearing, Tinonas said Napocor would also not be able to reach 44 unserved areas or 30,940 households that are still without power in remote islands.
Tinonas said the procurement of spare parts for the preventive maintenance of power plants under the small power utilities group may also be deferred.
The Senate committee on finance has endorsed Napocor’s budget to the plenary, where adjustments may still be made.
Gatchalian said it’s difficult to restore the entire ₱12.5 budget of Napocor, but various funding sources have been identified.
“What I see is a combination of loans, subsidies and old accounts,” he said.
Meanwhile, the Power Sector Assets and Liabilities Management Corp. (PSALM) lamented difficulties in collecting billions of pesos worth of debt from electric cooperatives. It said the Lanao del Sur Cooperative tops the list, with a debt of ₱13 billion.
Gatchalian said government takeover should be the last resort for ailing cooperatives.
To avoid a power rate hike, Napocor President and CEO Ferdinand Roxas said they are “working aggressively” to replace costly diesel with renewable energy sources.
Senators are also calling on the government to start oil and gas exploration activities to end the overdependence on imports, especially with the impending depletion of the Malampaya gas field.
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The Philippine National Oil Company Exploration Corporation said its target is to start drilling in Service Contract Number 37, located at Cagayan Basin, by late 2023 or early 2024.
Service contracts in the West Philippine Sea, like SC 75 in Northwestern Palawan, have to wait a little longer.
“There were some constraints when we were trying to do some seismic survey last April. That was put on hold due to security issues in the West Philippine Sea,” said Jimmy Bacud, PNOC’s Vice President for Upstream Operations. [CNN Philippines]
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Senators are also calling on the government to start oil and gas exploration activities to end the overdependence on imports, especially with the impending depletion of the Malampaya gas field.
That is the way to do it. Solve the problem. Use your brain, and solve the problem.
Exactly… Don’t give away your reserves but try to be self-resilient