MWSS: Hydropower plant sale may affect Metro water supply

BusinessWorld

Posted at Mar 16 2010 11:44 AM | Updated as of Mar 16 2010 07:44 PM

MANILA, Philippines - The water utility regulator for Metro Manila raised concern on Monday that power generation has taken priority over domestic water use at the Angat dam, claiming problems could arise if the Angat hydroelectric plant is privatized on April.

Diosdado M. Allado, Metropolitan Waterworks and Sewerage System (MWSS) administrator, said such “violations” may become more pronounced as a result of privatization.

The April bidding has attracted big players such as Ayala Corp. and Metro Pacific Investments Corp., San Miguel Corp., Aboitiz Power Corp., and the Lopez group’s First Gen Holdings Corp.

“I don’t want to bitch about it or point fingers to blame, but this becomes critical because the Angat dam is about to be privatized in terms of the power component,” Mr. Allado said yesterday before the weekly Kapihan sa Manila.

Under the dam’s water protocol, drinking water is the priority for Angat, with irrigation second and power generation last.

Mr. Allado, however, claimed the water protocol provision stating that water should not be released for power generation if elevation at the dam is below the lowest average levels is repeatedly being violated.

Water levels have fallen as a result of the dry season.

He said he did not have plans to block the plant’s sale.

The Angat dam is owned by the Power Sector Assets and Liabilities Management Corp. (PSALM), with National Power Corp. (Napocor) as the operator.

Napocor spokesman Dennis S. Gana allayed Mr. Allado’s concerns.

“The system is just adjusting because water release can’t be exact,” Mr. Gana said in Filipino in a phone interview.

Removing the 246-megawatt Angat hydroelectric plant from Luzon’s power supply mix may hike power rates, he added.

“If they’re telling us to pull hydro out of the power mix, then electricity will become expensive because hydropower is cheap. But even then, that does not mean that we are using water wantonly,” Mr. Gana said.

Conrad S. Tolentino, PSALM vice-president for asset management and electricity trading, said privatizing the Angat plant would in fact stop violations of the water protocol.

“The difficulty of enforcing that (protocol) is because the operator is [Napocor], which is a government entity. [Violations] will not happen if [the plant] is sold and a private entity takes over,” Mr. Tolentino said in a phone interview.

Mr. Tolentino added that the water protocol to be used for the privatization of the Angat hydroelectric plant has yet to be finalized.

Sanctions on violations of the water protocol may even be included in the new contract, Mr. Tolentino said.

PSALM, the government entity tasked to privatize the state’s generating assets as well as handle Napocor’s liabilities, has scheduled the Angat bidding on April 28.

The Angat dam supplies over 90% of Metro Manila’s domestic water needs.

At least 12 companies have prequalified for the bidding.