The upcoming Palawan Energy Summit, to be hosted by the provincial government on August 15, presents a timely opportunity to take a focused look at the power and energy situation in Palawan. This discussion goes beyond just improving local power services, as it also touches on larger issues of national importance.
One of the primary concerns expected to dominate discussions is the flaws in the current electricity services in the province—and rightly so. The Palawan Electric Cooperative (PALECO) is likely to be at the center of this scrutiny, as many participants will voice growing frustrations over frequent brownouts and high electricity prices. It is our hope that the collective expertise of the participants will elevate the level of debate, leading to a more sober and intelligent appreciation of the power sector’s challenges and the solutions needed to address them.
A key issue that the summit should address is the development of the mainland transmission grid. The Maharlika Investment Corporation, which manages the Philippine government’s Maharlika Investment Fund, is in the final stages of completing a feasibility study on upgrading the current mainland Palawan power backbone. The plan aims to establish an expanded and efficient power transmission network that will connect the entire mainland to the grid. Its central design consideration is replacing the existing low-capacity 16-kV lines of Napocor with larger cables capable of handling more power efficiently. This upgrade would ensure stable electricity transmission over long distances, thereby reducing system losses that contribute to high electricity costs.
An important aspect to consider however is the system’s operation. Once in place, the National Grid Corporation of the Philippines (NGCP) will manage and operate the system. However, NGCP has recently come under public scrutiny due to its ownership structure—40% of NGCP is owned by the State Grid Corporation of China (SGCC). This stake was acquired following the passage of the EPIRA Law, which led to the privatization of state assets and allowed SGCC to purchase a significant portion of NGCP alongside Enrique Razon’s Monte Oro Grid Resources Corporation and the SM Group’s Calaca High Power Corporation.
Once this new high-capacity transmission grid is completed, Filipino companies are expected to maintain managerial control, but the technical operations may rely on Chinese engineers and technologies, as this is what SGCC brings to the table. If we are not to be too concerned about China’s involvement in our power infrastructure—especially given the ongoing tensions between Beijing and Manila over the West Philippine Sea—a modernized transmission grid in Palawan would indeed be welcome.
Returning to the matter of PALECO, the focus here is on the efficiency of the distribution system and infrastructure, as well as the cooperative’s overall management capacity. It’s curious to note that while PALECO has never been categorized as an ailing cooperative under the guidelines of the National Electrification Administration (NEA), there is a growing call to privatize it or not renew its franchise, which is set to expire in five years. In the previous Congress, a bill was even filed to grant Razon’s MORE Electric a franchise that would replace PALECO’s.
Although MORE Electric has shown strong capability in managing a modernized electric distribution franchise in Iloilo, replicating this success in Palawan poses a significant challenge, given that Palawan is a different, and arguably more complex, environment. If MORE or any other private industry player is interested in acquiring the PALECO franchise, it remains to be seen whether a proper due diligence study has been conducted to ensure that this can be done without compromising the cost of electricity for consumers.
Finally, the Razon group’s involvement in the transmission backbone project, which is being considered for Maharlika funding, and its apparent interest in the PALECO franchise raises concerns about monopolistic practices. The EPIRA Law specifically mandates the separation of various power services—including transmission and distribution—to encourage healthy competition that benefits consumers.
However, if modernizing and upgrading the distribution system proves financially unviable for a private company, should the government allow a company already engaged in existing power generation—or the Razon group, which is invested in the backbone project—to bundle the distribution franchise and still make a profit? This is a critical question that needs to be addressed.
