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Investing in data centers and space technology

PHILIPPINE Stock Exchange (PSE)-listed DFNN, Inc. is poised for additional investments in data centers along with its partners from Silicon Valley, California. The tech firm is investing in the latest technologies to boost its platforms and software solutions for enterprise, e-government, and retail clients.

DFNN Chief Executive Officer Calvin Lim said: “We are bolstering our investments in the Philippines in spite of the daunting task of rebuilding the economy ravaged by the pandemic and significant external economic headwinds.” He disclosed that the company’s US-based partners have some of the most cutting-edge parameters such as zero wastewater, 100 kilowatts per rack, and industry-leading 1.15 maximum power usage effectiveness.

Another identified key area of DFNN’s investments will be space technology platforms and space sustainability support systems involving artificial intelligence and capability expansion for the Philippines. These will include the developments supporting the space and spaceport industries as well as their ancillary operations.

It may be noted that the global space industry has already surpassed $366 billion annually in market size and is expected to grow exponentially over the next decade. In the Philippines, this industry will be built around launch platforms for objects into near-space, low earth orbit, geostationary orbit, beyond earth, on interplanetary trajectories, or for space tourism. Such projects are in line with the updated Investment Priorities Plan of the Board of Investments under the Department of Trade and Industry.

In a recent disclosure to the PSE, DFNN announced the appointment of Steve Tsao as independent director. Mr. Tsao’s career began with Fortune 500 companies like Corning and Dupont, eventually expanding into gaming, media, venture capital, fintech, and online payment gateways. His international experience includes stints in Southeast Asia, Greater China, India, Middle East, and North Africa.

According to Mr. Tsao, “DFNN is a technology innovator in some of the quickest growing industries such as blockchain and digital currency. The opportunities to operate in a sandbox environment in the Philippines — and then to expand and grow globally — is something DFNN has continuously demonstrated under good governance.”

During the first quarter of 2022, DFNN’s total revenues grew by 81.3% to P283.7 million from the year-ago level of P156.5 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) reached P95.8 million and posted a whopping 885% growth compared to the negative P12.2 million EBITDA in the corresponding period last year.

Meanwhile, revenue from share-based income generated from interactive technology platforms rose by 116.6% to P229.3 million from P105.9 million during the same period in 2021. Sales of software and application licenses amounted to P41.6 million, registering a 53.9% growth year on year. The latter has been attributed to the increase in the sales of foreign licenses.

To sustain the continued growth, DFNN is cognizant that this will hinge heavily on its ability to act in a timely manner with regard to COVID-19 conditions by imposing expedient measures that minimize health and economic risks. It also means the adjustment of business strategies to effectively respond to the ever-changing economic climate.

Mr. Lim emphasized that “DFNN will be a partner in nation-building and will continue to support the government in realizing its programs aimed at making the Philippine economy competitive and resilient.”

 

J. Albert Gamboa is the chief finance officer of Asian Center for Legal Excellence and chairman of the FINEX Media Affairs Committee. The opinion expressed herein does not necessarily reflect the views of these institutions and BusinessWorld. #FinexPhils www.finex.org.ph

How PSEi member stocks performed — May 19, 2022

Here’s a quick glance at how PSEi stocks fared on Thursday, May 19, 2022.

Philippines rises in elite quality rankings

The Philippines climbed six places to rank 61st out of 151 countries in the latest edition of the Elite Quality Index that assesses the elites’ contribution in wealth creation and society development. It placed seventh out of 10 Southeast Asian countries included in the index, ahead of Timor-Leste (64th overall), Laos (79th), and Myanmar (110th).

Philippines rises in elite quality rankings

Stocks slide on Wall Street’s decline, BSP move

SHARES slid on Thursday following Wall Street’s decline overnight and the Bangko Sentral ng Pilipinas’ (BSP) announcement of a 25-basis-point (bp) increase in borrowing costs at its policy review.

The benchmark Philippine Stock Exchange index (PSEi) fell by 67.55 points or 1% to close at 6,660.05 on Thursday, while the broader all shares index went down by 22.28 points or 0.62% to 3,567.78.

Analysts said the PSEi closed lower after the BSP’s policy decision, which was announced just minutes before the market’s close.

“Philippine shares alongside with the US slipped once again, as the major regional indices posted their biggest drop since 2020. The move came after big-box retail earnings indicated inflation was weighing on earnings,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The PSEi recouped some of its earlier losses… not as bad as the bigger declines in the US and other Asian/global stock markets. Market sentiment also supported by the +0.25 policy rate hike that could indicate relatively stronger economic fundamentals to withstand any local policy rate hike/s, going forward,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.

Mr. Ricafort said more BSP rate hikes are possible in the coming months due to expectations of aggressive increases from the Fed as US inflation continues to soar.

Wall Street ended sharply lower on Wednesday, with Target losing around a quarter of its stock market value and highlighting worries about the US economy after the retailer became the latest victim of surging prices, Reuters reported.

It was the worst one-day loss for the S&P 500 and Dow Jones Industrial Average since June 2020.

Meanwhile, the BSP Monetary Board fired off its first 25-bp rate hike in over three years on Thursday to help temper second round effects of rising prices and inflation expectations while making sure economic recovery remains on track.

The central bank had cut borrowing costs by a total of 200 bps in 2020 to help the economy weather the impact of the coronavirus pandemic.

Sectoral indices were split on Thursday. Holding firms declined by 115.12 points or 1.83% to 6,146.34; property gave up by 46.38 points or 1.54% to end at 2,962.43; and services dropped by 22.80 points or 1.19% to 1,884.86.

Meanwhile, mining and oil climbed by 157.65 points or 1.40% to 11,359.18; financials rose by 8.50 points or 0.53% to 1,613.37; and industrials gained 18.92 points or 0.20% to close at 9,307.53.

Value turnover increased to P8.01 billion on Thursday with 1.69 billion shares switching hands from the P7.75 billion with 1.6 billion issues recorded the previous trading day.

Decliners outnumbered advancers, 105 versus 79, while 36 names closed unchanged.

Foreigners turned sellers anew with P315.02 million in net sales versus the P270.89 million in net buying seen on Wednesday. — L.M.J.C. Jocson with Reuters

Peso ends unchanged vs dollar after central bank’s decision

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THE PESO ended flat versus the greenback on Thursday after the central bank hiked benchmark interest rates for the first time since 2018 and amid the decline in global oil prices.

The local unit closed at P52.45 per dollar on Thursday, unchanged from its Wednesday finish, Bankers Association of the Philippines data showed.

The peso opened Thursday’s session at P52.41 versus the dollar. Its weakest showing was at P52.47, while its intraday best was at P52.30 against the greenback.

Dollars exchanged increased to $1.119 billion on Thursday from $805.9 million on Wednesday.

The peso closed flat versus the dollar after the central bank raised borrowing costs from record lows.

The Bangko Sentral ng Pilipinas (BSP) fired off its first 25-basis-point rate hike in over three years on Thursday to help temper second-round effects of rising prices and inflation expectations while making sure economic recovery remains on track.

“The Monetary Board believes that a timely increase in the BSP’s policy interest rate will help arrest further second-round effects and temper the buildup in inflation expectations,” BSP Governor Benjamin E. Diokno said at an online briefing.

Eight out of 17 analysts in a BusinessWorld poll had predicted a rate hike from the BSP.

The central bank now expects inflation to average 4.6% this year from 4.3% previously, well beyond the 2-4% target. The forecast for next year was also raised to 3.9% from 3.6%.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said the market also considered the decline in global oil prices early on Thursday.

Oil prices had declined to their lowest level in nearly a week early on Thursday due to concerns on how the restrictions in China will hit demand.

However, fuel prices recovered from early losses as lingering fears over tight global supplies outweighed fears over slower economic growth, Reuters reported.

Brent crude rose by 1.2% to $110.41 per barrel, while US crude was up 0.8% to $110.48 a barrel. — L.W.T Noble with Reuters

NEDA recommends continued rice tariffication to Marcos team

THE National Economic and Development Authority (NEDA) said it recommends that the next government, to be led by top presidential vote-getter Ferdinand R. Marcos, Jr., continue with the Rice Tariffication Law and use it as a model for other agricultural reforms.

“The Rice Tariffication Law (RTL) is the best model that we have to help both farmers and consumers,” Socioeconomic Planning Secretary Karl Kendrick T. Chua said in a statement.

The law, also known as Republic Act No. 11203, benefits 2 million farmers, 110 million consumers, and thousands of retailers, wholesalers, millers, and those in the warehousing and transport businesses, Mr. Chua said.

“We hope that this and our dialogue with the transition team of the new administration will help them better understand the costs and benefits of the policies that we have proposed. The RTL is the best model to help both farmers and consumers. We are proposing the same model for livestock, poultry, and dairy, and we hope to do that for other crops as well,” Mr. Chua said.

The law replaced the quantitative restrictions on imported rice with deregulated imports, which must pay a tariff of 35% for grain shipped in from the rest of Southeast Asia, which enjoys the benefit of regional trade privileges. The tariffs support the Rice Competitiveness Enhancement Fund (RCEF) to the extent of P10 billion a year.

At a briefing on the Philippines’ economic performance in the first quarter, Mr. Chua said, “By removing quantitative restrictions, we are able to address both the needs of consumers for a lower retail price of rice and use the tariff revenues to fund the RCEF and provide even more assistance to farmers with excess tariff revenues.”

The RCEF is funded for six years and supports farm mechanization, seed development, propagation and promotion, credit assistance, and extension services projects.

These programs are designed to improve the productivity of rice farmers, reduce production costs, and link them to the value chain, leaving them able to compete with imports.

Tariffs in excess of the P10-billion RCEF funding requirement have been appropriated by Congress for financial aid programs for rice farmers, titling of rice lands, expanded crop insurance, and crop diversification.

“Last year, we collected P18.9 billion from rice tariff collections. We gave all that back to rice farmers. Those calling for the removal of the RTL risk taking away what we are giving to farmers to improve their productivity,” Mr. Chua said.

“Further lowering the price of rice for all Filipinos is really possible if we help farmers improve productivity. That is exactly what the RTL is doing by providing them with mechanization, seeds, and other support,” he added.

The law has been a key factor in managing inflation, Mr. Chua said.

“Prior to 2019, rice was the single biggest contributor to inflation. Today, and since the passage of RTL three years ago, it has had a negative to minimal contribution to inflation,” Mr. Chua said.

Stable supply from higher production and more imports lowered rice prices. The most recent inflation data indicate that rice inflation averaged 1.4% in the first three months of the year.

“Even during the first quarter, when rice production slightly declined, inflation of rice was below 2%. That’s because we are able to temporarily import. Importation is a way to address supply and price volatility. If we did not have that, people would have faced much higher inflation today,” Mr. Chua added. — Keisha B. Ta-asan

ERC’s Devanadera sees immediate price impact if fuel excise suspended

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THE HEAD of the Energy Regulatory Commission (ERC) has called for the suspension of the excise tax on coal and petroleum products to immediately bring down the cost of electricity.

“The very immediate (solution) is, we can go into (the) suspension of the excise tax,” ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said in a virtual briefing late Wednesday.

She identified coal and petroleum products as items that can be exempted from the excise tax.

“Here the impositions of (the) government in terms of taxes amount to about 12%,” she said. “You’d see that in your (electricity) bill.”

Ms. Devanadera called the briefing and offered her proposal ahead of the change in political leadership in July, which is also the same month that her term at the ERC ends.

She said the suspension of the excise tax is among the solutions needed to bring down power rates in the Philippines, which are among the highest in Southeast Asia.

“The actual cost that is being billed to us is reflective of the real cost as there is no subsidy,” she said.

She also cited supply constraints brought about by the Russia-Ukraine war that have jacked up the cost of petroleum products, further pushing higher the cost of electricity.

“Unlike other countries, (the Philippines does not) provide a subsidy for energy,” she said.

Ms. Devanadera also called for a review of the multiple imposition of the value-added tax (VAT) that further adds to the cost of electricity. She said VAT is imposed on power generation companies when they sell to the distribution utilities that bring electricity to consumers.

“When Meralco (Manila Electric Co.) bills us, the consumers, meron na namang (there is again) VAT,” she added.

For consumers, the imposition of VAT is a burden because it is applied on power generation, transmission, and distribution, Ms. Devanadera said, adding that the tax should be imposed only on distribution utilities.

Pass-through charges from power generation and transmission are paid to the suppliers and the grid system operator, respectively. Taxes, universal charges, and the feed-in tariff allowance are remitted to the government. Power sellers earn from the distribution charge.

“We don’t need a law to be passed. It’s a matter of interpretation of the agency that can do this,” she said, pointing to the Bureau of Internal Revenue. “That will give us a reduction of about 7%, so that’s a lot.”

Even the system loss — or power that is lost when it is exported from the plant to end-consumers — is charged VAT, she added.

“We don’t need a law for that,” she said, referring to the removal of the system loss VAT. “We only need an issuance by the executive.”

Her sample computation put the VAT component at P1,700 of a monthly electricity bill of P16,000, but if the tax is imposed only on the distribution utility, consumers could end up paying between P400 and P600.

Asked about substitute revenue sources for the government in place of the suspension of the excise tax and VAT, she suggested imposing higher taxes on non-essentials, which she identified as cars, condominiums, and gaming.

Ms. Devanadera was appointed to head the ERC towards the end of 2017. Her appointment papers, authorizing her to serve out the unfinished term of her predecessor, set the end of her term at July 10, 2022. — Victor V. Saulon

Debt-to-GDP ratio seen peaking at 66.8% by 2024

NATIONAL GOVERNMENT debt as a share of gross domestic product (GDP) is expected to peak at 66.8% by 2024, the Philippine Institute for Development Studies (PIDS) said in a recent discussion paper.

Employing a debt sustainability analysis method employed by the International Monetary Fund, the PIDS found that “the National Government debt-to-GDP ratio may remain elevated in the medium term, peaking at 66.8% in 2024 and dipping to 65.7% by 2026.”

It said the recent debt surge is “less worrisome” compared to earlier debt episodes.

The findings were contained in the discussion paper, “Fiscal Effects of the COVID-19 Pandemic: Assessing Public Debt Sustainability in the Philippines.”

“In our analysis of the immediate impact of the COVID-19 pandemic and related fiscal responses on the Philippines’ public finances within a historical frame, the most recent debt surge appears less worrisome than earlier debt episodes in that it is not due to sharp interest rate shocks, excessive external debt, or a buildup of hidden (non-budget) deficits, nor a steady decline in the country’s tax effort,” according to the paper.

“Instead, debt decomposition shows the surge was driven by an exogenous (pandemic-induced) drop in output growth and a resultant rise in primary deficits as revenues temporarily collapsed and relief and recovery spending by government accelerated.”

Once GDP growth returns to pre-pandemic levels this year, “fiscal deficits will trend downwards, and interest-growth differentials will remain negative, generating favorable conditions for debt reduction in the near to medium term,” the PIDS said.

The Philippine economy expanded by a better-than-expected 8.3% in the first quarter, surpassing the pre-pandemic output level as household spending surged amid the easing of coronavirus curbs.

Preliminary data released by the Philippine Statistics Authority showed GDP quickened by 8.3% year on year in the January to March period, a turnaround from the 3.8% contraction in the same period last year. It was also faster than the revised 7.8% growth in the fourth quarter of 2021.

Meanwhile, the National Government’s debt at the end of March was P12.68 trillion, equivalent to 63.5% of GDP, based on data handed by the Bureau of the Treasury (BTr).

The state-run think tank’s estimated debt-to-GDP level by 2024 would be the highest since the 71.6% recorded in 2004, based on historical BTr data.

However, the nature of the debt that piled up during the COVID-19 pandemic augurs well for repayment prospects and reducing the debt ratio relative to the size of the economy, the PIDS said.

“Since half of the accumulated debt during the height of the pandemic crisis (6.3 out of the 15% of GDP increase in 2020) comprised cash buffers of government that were built up in the event of a prolonged pandemic (and to benefit from loose monetary conditions), with such behavior continuing to the present, the scope for a future debt decline is wide. Netting the government’s cash reserves, the debt-to-GDP ratio would follow a similar but much lower trajectory.”

The discussion paper concluded that “it may not be feasible to immediately aim for a low debt ratio to give the economy time and room to recover from the pandemic shock, but nonetheless underscores the importance of a sound medium- to long-term fiscal consolidation plan.”

The analysis also found that the Philippines and other ASEAN countries “respond to rising indebtedness by improving primary balances. In the literature, such systematic behavior indicates responsible fiscal policy and already guarantees fiscal solvency.”

“It is therefore crucial that fiscal policy reforms, especially those that were hard-won, remain intact,” the PIDS concluded.

Written by economists Margarita Debuque-Gonzales, Charlotte Justine Diokno-Sicat, John Paul Corpus, Robert Hector Palomar, Mark Gerald Ruiz, and Ramona Maria Miral, the discussion paper was published on May 18. — Keisha B. Ta-asan

Foreign chambers press Congress to ratify Transportation Safety Board legislation

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THE Joint Foreign Chambers (JFC) pressed Congress to ratify the bill creating the Philippine Transportation Safety Board (PTSB), calling it an overdue piece of legislation that has been delayed for decades.

In a statement on Thursday, the JFC said it sent letters to the House and Senate leadership to ratify Senate Bill No. 1077 and House Bill No. 9030, which were harmonized in Bicameral Conference.  

“This important reform bill creating the PTSB is ready for immediate passage. With the bicameral conference committee of both chambers having been convened, the JFC eagerly awaits the ratification of the reconciled version. Once ratified by both houses the bill can finally be endorsed for enactment by the President,” the JFC said.

“For over two decades, the PTSB bill has languished in Congress. Only during the current 18th Congress has this bill reached the advanced stage in both chambers which now has solid prospects for enactment into a law,” it added.  

The 18th Congress is set to resume session on May 23 until its sine die adjournment on June 3.

According to the JFC, other groups such as the Safe Travel Alliance, International Air Transport Association, and Air Carriers Association of the Philippines are also pressing for the creation of the PTSB.

It added that major transportation accidents can be prevented under PTSB leadership once the bill is enacted.

The bill seeks to create a non-regulatory and independent agency attached to the Office of the President. The agency will be responsible for impartially investigating transportation accidents and incidents.

The board’s task has been defined as improving transportation safety, minimizing danger to human life and property, and ensuring the implementation of transportation safety standards.

The JFC said various agencies currently handle accident investigations such as the Civil Aviation Authority of the Philippines and the Maritime Industry Authority.

It added that road accidents involving public utility vehicles are handled by the Land Transportation Franchising and Regulatory Board, while other road accidents may also be investigated by the Philippine National Police, Land Transportation Office, and Metro Manila Development Authority.

“With establishment of the PTSB, the gap in bureaucracy which allegedly contributes to inefficiency in the implementation of transportation-safety schemes and ineffectual safety measures will be addressed. PTSB’s regulatory, investigatory, and fact-finding functions will allow the agency to implement a proactive approach and be in control of the situation even before it happens. As an independent and impartial transport safety body, it is tasked to coordinate,” the JFC said.

“As a country that is generally dependent on inter-modal transportation systems to facilitate the movement of goods, cargo, and people to, from, and within its archipelago, institutional reforms to enhance the standards of transportation safety measures, prevent transportation accidents in the future, and mitigate dangers to human lives and property is mostly needed,” it added.

Signatories to the statement are the American Chamber of Commerce of the Philippines; Australian-New Zealand Chamber of Commerce of the Philippines; Canadian Chamber of Commerce of the Philippines; European Chamber of Commerce of the Philippines; Japanese Chamber of Commerce and Industry of the Philippines, Inc.; Korean Chamber of Commerce of the Philippines, Inc.; and the Philippine Association of Multinational Companies Regional Headquarters, Inc. — Revin Mikhael D. Ochave

Auto assemblers back plan for zero EV tariffs

ELECTRIC VEHICLE ASSOCIATION OF THE PHILIPPINES FACEBOOK PAGE

THE Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) said it supports a proposal to suspend tariffs on electric vehicle (EV) imports, a measure which it said will support EV adoption and reduce emissions. 

CAMPI said the proposal to charge zero tariffs on EVs is consistent with Republic Act No. 11697 or the Electric Vehicle Industry Development Act (EVIDA). 

“CAMPI supports all EV technologies including hybrid electric vehicles (HEV), plug-in hybrid electric vehicles (PHEV) and battery electric vehicles (BEV). All these have potential for fuel consumption reduction and vehicle emission mitigation in the mid- to long-term,” CAMPI President Rommel R. Gutierrez said in a statement late Wednesday.

“The scope of the proposal is consistent with the definition of EVs under EVIDA, which includes HEVs, PHEVs, BEVs and light electric vehicles,” it said. Lapsed into law on April 15, 2022, EVIDA now sets the policy agenda for EV development.

CAMPI said all EV-related policy should be consistent with the law in order not to diminish EVIDA’s potential, he added.

The Department of Trade and Industry proposed a zero percent tariff policy for EV imports, against the current 30% tariff, in order to support EV adoption as prices of petroleum-based fuel rise.

EVIDA, which lapsed into law on April 15, provides for the creation of a Comprehensive Roadmap for the Electric Vehicle Industry (CREVI). The roadmap will become the development plan for the EV industry en route to commercialization of the technology.  

The law also requires government and private firms to observe a 5% EV quota for their vehicle fleets, according to a timetable to be set by the CREVI.

CAMPI said that it is not ideal to set uniform EV requirements for the transport fleet since operators may have different considerations for adoption.

“The EV requirements and motivation for adoption of public utility vehicle operators significantly differ from that of private transport users,” CAMPI said.  

The group added that EV adoption is growing in the private vehicle market as its members begin to offer original equipment manufacturer EVs.

“Private vehicles accounted for approximately 94% of the total vehicle fleet (excluding trailers and motorcycles) in 2021. In terms of fleet size, there is no doubt that electrification of private transportation will substantially reduce fuel consumption and vehicle emissions,” CAMPI said.

“While there are many factors affecting the wide-spread adoption of EVs, the group is optimistic that EVIDA measures and the 0% tariff proposal put the automotive industry in the right direction in terms of vehicle electrification,” it added. — Revin Mikhael D. Ochave

DPWH, JICA sign deal to improve safety on mountain roads

LEOCADIO SEBASTIAN/ FLICKR

THE Department of Public Works and Highways (DPWH) said on Thursday that it recently signed an agreement with the Japan International Cooperation Agency (JICA) to cooperate in road disaster prevention and other measures to increase safety on the Philippines’ mountain roads.

The goal is to “enhance capability on implementation of permanent countermeasure works for slope disaster, emergency response, hazard map development, and road disaster information management based on a road disaster information system,” the DPWH said in a statement.

“Appropriate road disaster countermeasures against landslides, debris flow, and rock collapse are necessary due to yearly occurrence of strong typhoons and earthquakes, which render many roads impassable,” it added.

Public Works Secretary Roger G. Mercado and JICA Philippines Office Chief Representative Takema Sakamoto signed on May 18 the “record of discussions” to formally start a technical cooperation program on road disaster prevention and other countermeasures on mountain roads.

“The signed record of discussions establishes a mutual agreement for implementation of detailed plan for the project,” the department said.

Mr. Mercado noted that with the willingness of Japanese experts to share their technology on landslides and other forms of road disaster mitigation, the department’s engineers will be able to apply the “best methodology” available to improve safety.

The department said the technical cooperation with JICA will run for three and a half years, with pilot sites in the Cordillera Administrative Region and Regions 7 and 11.  — Arjay L. Balinbin

ERC approves EDC application to link geothermal plant to Mindanao grid

EDC HANDOUT

THE Energy Regulatory Commission (ERC) has approved the application of Energy Development Corp. (EDC) to develop a point-to-point power transmission line that will connect its 3.6-megawatt (MW) power plant near Mount Apo to the Mindanao grid.

However, the regulator denied the company’s application to operate and maintain the transmission line, a function which it gave to privately-owned National Grid Corp. of the Philippines (NGCP).

In arriving at its decision, the ERC said it had focused its evaluation on the technical capability of EDC to develop the transmission facility, and the mode of recovery of cost in case it is “required for competitive purposes and ownership” to be transferred to the government or NCGP.

In its decision, the ERC said that as a general rule state-led National Transmission Corp. or its concessionaire NGCP has the responsibility to provide grid interconnection for power generation facilities under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001.

However, the regulator pointed out an exception.

“A generation company may develop and own or operate dedicated point-to-point limited transmission facilities that are consistent with the Transmission Development Plan (TDP): Provided, that such facilities are required only for the purpose of connecting to the transmission system, and are used solely by the generating facility, subject to prior authorization by the (ERC),” the agency said.

The ERC also said that the power plant was included in the committed projects submitted to the Department of Energy to help augment the power requirements of the Mindanao grid.

“Thus, the development of the subject facilities is necessary for the said connection,” it said.

In its filing, EDC placed the cost of the transmission facility at P244.69 million. It intends to connect the plant to the grid through an approximately 1-kilometer 69-kilovolt transmission line. 

EDC’s project, called Mindanao 3 (M3) binary geothermal power plant, expands its existing Mt. Apo geothermal facility with an additional supply of renewable power in Mindanao.

In its website, the company said the project will not only contribute reliable power to Mindanao but will also avoid around 25,000 tons of equivalent carbon dioxide yearly through the use of geothermal energy instead of coal.

The binary power plant, which started construction during the pandemic, will make use of existing brine from the company’s 103-MW Mindanao 1 and 2 geothermal power plants to generate energy without need for additional drilling.

The brine’s heat is harnessed to generate electricity for the new power plant before it is re-injected back to the reservoir. It was synchronized to the Mindanao grid on March 12, 2022, and passed NGCP’s compliance testing on March 25. — Victor V. Saulon

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