LGUs preferred to develop renewable energy projects over private corporations

MALAYBALAY CITY (MindaNews / 6 July) – Local government units are the better developers of renewable energy projects like hydroelectric power because of faster time to develop at lower cost, among other reasons.

David A. Tauli, of the Mindanao Coalition of Power Consumers, told MindaNews that LGUs can obtain permits from government agencies faster, and can offer lower rates because of the lower rate of return requirement.

“The best part of the renewable energy solution to the Mindanao power problem is that most of the power plants will be owned by the people through their local governments and not by private corporations or the national government,” he added.

Romeo Montenegro, investment promotions and public affairs director of the Mindanao Development Authority (MinDA), said if the LGU is capable, competent, and has put in place a proper mechanism to operate a plant like a private entity, then the scheme is preferred.

“With LGUs, more profit means more budget is ploughed back to the project for the benefit of the owners – more services for the people,” he added.

But he stressed that if the LGU lacks the qualifications, then it should not go into power generation.

Tauli pointed out that it is easier for LGUs to obtain low-cost loans.

“Earnings from hydro (electric) projects go to the LGU for use in the development of the river and its watershed area, as well as for other government services,” he added in a PowerPoint presentation.

He said a greater part of about 540 megawatts total new capacity from 2016 to 2018 will be owned by the local government in partnership with private corporations, the latter will take charge of construction, operation, and maintenance.

Tauli, also an engineering consultant of Bukidnon Rep. Florencio T. Flores (2nd Dist.), was previously connected with the Cagayan Electric Power and Light Company (Cepalco).

He said the provincial, city, or municipal government can be the developer and owner of the project with the advantage that the project itself is the collateral for bank loans.

He added that LGUs need not infuse capital into the project “but can borrow all funds required for project implementation.”

But he clarified that construction should not be done by administration or by the LGU itself.

He said it should be done by private hydro corporations through public bidding and operations should be managed by private corporations, too, through public bidding.

Montenegro, however, clarified LGUs to work with the local electric cooperatives for embedded capacity before offering their new power source to the grid.

He added that what bogs many power buyers from contracting with LGUs is the possibility of problems in sustainability, political dynamics, and lack of good governance in some.