More power supply worries

PHILIPPINES - In Brief 18 Jan 2022 by Romeo Bernardo

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In a commentary last year on domestic inflation concerns,[1] we cited the sufficiency of electric power supply as one of the risks that have macro level implications.[2]Barely two weeks into the new year, we are seeing just how idiosyncratic the risks affecting this complex sector have become. As it is, the country entered 2022 with typhoon-related damages[3] to power facilities that could lead to reserve shortfalls (“yellow alerts”) in the Luzon and Visayas grids. This came on top of outstanding issues related to the contracting of reserve power[4] and the looming expiry of the supply agreement of the 1200MW Ilijan power plant fueled by Malampaya gas. Now two weeks in, power sector players are again in crisis management mode following Indonesia’s coal export ban, with the energy department joining other countries in the region in urging Indonesia to lift the ban. Indonesia supplies over 95% of the Philippine’s coal imports. Coal-based plants, which comprise 44% of the power sector’s dependable capacity in 2020 and close to 60% of power generation, rely mainly on Indonesian coal. Although Indonesia has started to allow coal shipments to other countries in the region, industry players tell us that the Philippines is not among the priority destination countries. Reports indicate that with some plants scheduled for maintenance shutdown, available coal stocks may still last a couple of months which from an aggregate perspective would tide the country over until the lifting of the export ban at end-January. That however has not stopped some worried power plant operators from planning for contingencies associated with logistical delays through purchases of coal in the spot m...