The bid of Delta P for an additional 26.6 megawatt power supply project successfully passed the Competitive Selection Process through a Swiss Challenge by the Bids and Awards Committee of the Palawan Electric Cooperative, Friday.
BAC Chairman Nap Cortes announced prior to the selection process that there were two companies that manifested their interest during the pre-bid conference held September 19 but did not appear during the formal opening and evaluation of comparative proposals thus the BAC will award the project to Delta P, the original proponent of the proposed project.
The 26.6 megawatt power supply project is expected to be completed in the third quarter of 2016 at a total budget cost of P1.6 billion.
Gigawatt Power Inc. Senior Vice President Tito Villareal said that they will be using brand new bunker fueled engines which are now in Bauang, La Union and ready for shipment to Palawan.
GPI is one of the holding companies of Delta P. DPI is one of three independent power producers in Palawan operating a 16-MW bunker-fired power plant comprising four (4) units of 4-MW generator sets.
Villareal stressed that they went ahead of the project approval recognizing the need to address the pressing problem of a lack of a reliable, low-cost power supply on Palawan, especially during summer season.
“Without even being definitely sure of the agreement, and because we see the need, we already started clearing the land and started the foundation. Our timetable states that if everything goes on schedule, before the end of next year these engines will be supplying energy,” Villareal said.
“We will strive to give our best service to PALECO and its consumers. The consumers have suffered from continuing brownouts and blackouts and we will do our best to solve this problem,” Villareal added.
The current power supply agreement of Delta P with Paleco will expire in March 2019 and the project is in preparation for the end of the first contract with a two-year overlapped period.
Contrary to the concern that PALECO might “over contract” the power supply by giving this project to Delta P (which was the subject of a Temporary Restraining Order filed by DMCI Power Corporation with the Energy Regulatory Commission, but later dismissed), Paleco General Manager Ric Zambales assured that with the new Delta P project, Palawan will have enough generating capacity to meet increased demand in the next five years. The Delta P plant will all add stability, reliability and flexibility to the grid and complement the other independent power producers.
“We have sufficient supply of power for the next five years with the addition of 26.6 megawatt which will be operational by the third quarter of 2016,” Zambales said.
Of particular concern to the business community is the impact of the new power plant on power rates. Currently, the True Cost Generation Rate (TCGR) for the Palawan grid is about P12 per kilowatt hour. However, consumers pay only P6.58/kwh. The difference of P5.4/kwh is made up by the Universal Charge for Missionary Electrification – a subsidy of about P5.4/kwh or over a billion pesos per year for Palawan.
There is growing concern that the UCME subsidy will be removed in the future, forcing consumers to pay the true cost of generating electricity. The winning rate submitted by Delta P was P8.22/kwh which will substantially reduce the “blended” generation rate on the Palawan grid. With the addition of three small hydro plants with a combined capacity of 18Megawatts on the Langogan, Batang Batang and Kalikiagan Rivers over the next 3 years at a rate of P6.58/kwh, the blended rate will be further reduced and help buffer the impact of reducing the UCME subsidy.