Langogan power deal is a game changer

Redempto Anda

The signing of a power supply agreement between Langogan Power Corporation (LPC) and the Palawan Electric Cooperative (Paleco) last Friday is a milestone in Palawan’s socially charged quest for power supply reliability. After several years of trying to get a contract, Paleco finally gave the fledgling renewable energy company a 20-MW deal for its plan to generate electricity from three major river systems in the Palawan mainland.


LPC is now the new kid on the block, in the company of PPGI, Delta P and the notorious DMCI with its controversial coal plant project. It stands out from the rest of these guys as the only renewable energy project in the Paleco portfolio thus far.


Renewable energy is the alternative option being pushed by civil society in its bid to turn back DMCI and its coal plant project, a tall order in the face of the company’s strong political clout and influence in the province.


The proposed Palawan coal plant, an oxymoron considering the many factors why the province is tagged as the country’s last environmental frontier, has pitted conservation NGOs, local communities and the provincial government in a heated, often emotional, policy clash. The local government firmly believes that Palawan has to embrace coal as it doesn’t have a better choice to meet its growing demand for electricity. At least that has been Gov. Jose Alvarez’ known stand on the issue.


His strong personality and leadership style has petrified the entire government bureaucracy into adopting this policy position without question. When DMCI faced angry residents and a university institution in Aborlan for its first choice of a plant site, Capitol’s political machinery mobilized to support the embattled Consunji company. But even that was not enough to stop the rallies and protests. DMCI decided to just pack up and find another site. In the ruins of this particular coal skirmish lay 2,000 poor college students stripped of their scholarship for simply signing an anti-coal petition, and a tarnished image of the Palawan governor for appearing, in the commentary of Winnie Monsod, “autocratic”.


Paleco has also been a battle arena for coal. Recent elections in the board of directors of the electric cooperative were marred by allegations of manipulation by Capitol as it vied to gain control over the private cooperative’s policy making body. For the longest time until the signing of the Langogan power contract, Paleco has been giving LPC the runaround as Capitol tried to portray the group as lacking in financial capacity. In fairness to the current Paleco board, the push for Langogan’s contract signing appeared to be a result of its own due diligence work, perhaps also its way of demonstrating its independence.


And finally the Palawan Council for Sustainable Development (PCSD) which is chaired by no less than Governor Alvarez is yet another major arena. DMCI breezed through the process of securing an SEP clearance, a permitting requirement that has become too politicalized because of the composition of the PCSD board and weaknesses in its own systems and procedures.


It has not helped DMCI’s cause that its temporary diesel generators kept breaking down, plunging the mainland grid into debilitating brownouts that pissed even Governor Alvarez himself he reportedly scolded DMCI executives at one time. The company remains in a bind, as it still has a long way to go before it can even begin to break ground for its new coal plant site in Barangay San Isidro, Narra. At the rate things are moving however, Langogan is set to overtake DMCI in putting up a power plant.


Since signing its own supply contract for a 25-MW of coal power with Paleco back two years ago, DMCI has not delivered on what it is legally bound to deliver. Paleco has faced increasing pressure from consumers to junk DMCI for breach of contract. In fact, Paleco did issue a notice of default which DMCI simply brushed aside. Even the Department of Energy egged DMCI to back out from the mess it had created but the power firm simply apologized and made new promises.


The current state of affairs has left the main grid in a continual state of power instability, where the slightest disturbance in the supply and distribution chain already operating on its optimum capacity without a backup or reserve triggers a brownout.


Langogan has been given the stage to prove that RE technology can work in Palawan but its road to success isn’t necessarily easy. While the technology of run-of-the-river power generation looks fairly solid, experts have continuously doubted its ability to perform during dry seasons when the rivers dry up. Because of its favored status as a renewable energy company, Langogan enjoys being first dispatch in the Paleco grid. This means that whatever power they generate is immediately used as base load. This also means increased pressure on the company not to leave the end users in the dark.


Langogan’s mini-hydro project shifts the continuing debate on coal in Palawan in many respects. It already debunked the claim that no RE company is interested in Palawan hence the only option is coal. Already, Paleco is reportedly already entertaining unsolicited proposals from other RE companies interested in its northern Palawan franchise area.


Langogan’s success will be a game changer in this debate and could force DMCI to adopt or be steamrolled over as it faces the prospect of redundancy and a string of legal compliance issues. Even a six-megawatt initial addition that the Langongan will deliver from its first planned series of three plants along river banks should stabilize the supply enough for Paleco and provincial policy makers to shift to long term strategic thinking on how to deal with the province’s energy challenges.


To begin with, the province’s energy masterplan which is a result of long term visioning and a healthy dose of expert inputs, has already adjudged coal as expensive and inefficient in the long run. What keeps DMCI ticking is still its adamant stance to hold on to its contract and the accommodation it continues to receive from the local government.


There is increased pressure on Paleco to manage its IPP portfolio well, as it had been criticized by no less than former DOE Secretary Jericho Petilla for being over-contracted. This is a dangerous situation because these contracts are long term and they will keep the true cost of power generation very high. Consumers just don’t feel it because we remain subsidized by the rest of the country.


How long can DMCI hold? Going by its track record and reputation built recently around the Torre de Manila controversy, it will keep on fighting. In Palawan, the company has moved fast to gain footing on the profitable mining business but it is also fast losing ground on its power supply venture that it should be weighing its options by now, on crisis mode.

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