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PM says Singapore must remain open as anxiety over job competition grows

REUTERS

SINGAPORE — Singapore must stay open to preserve its status as a global business hub, its prime minister said on Sunday, even as the country continues to tighten its foreign worker policies and addresses anxieties among locals over competition for jobs.  

Foreign labor has long been a hot button issue in Singapore, but uncertainties due to the coronavirus disease 2019 (COVID-19) pandemic have increased employment worries among locals as the city state recovers from last year’s record recession.  

“We must make it crystal clear to the world that Singapore is determined to stay open, in order to earn a living for ourselves,” Lee Hsien Loong said in his National Day Rally speech. He said the country must not give the impression that Singapore is becoming xenophobic and hostile to foreigners.  

“It would gravely damage our reputation as an international hub. It would cost us investments, jobs, and opportunities. It would be disastrous for us.”  

While Singapore will continue to tighten its foreign worker policies, it will only do so gradually so as not to hurt businesses, Mr. Lee said. The government will also pass a law to ensure fair hiring, he said.  

Mr. Lee’s government has been tightening foreign worker policies for several years while taking steps to promote local hiring, including by raising the salary threshold for issuing work permits.  

Just under 30% of Singapore’s 5.7 million population are non-residents, up from around 10% in 1990, according to government statistics.  

On Sunday, Singapore hit a key milestone of fully vaccinating 80% of its population against COVID-19, setting the stage for further reopening of the economy as the country gets ready to live with the virus as endemic.  

“We may have to tap on the brakes from time to time, but we want to avoid having to slam on the brakes,” Mr. Lee said.  

“So in the next phase, we will move step by step not in one big bang like some countries but cautiously and progressively, feeling our way forward,” Mr. Lee added. — Reuters 

Voter’s registration now among the government services offered at SM

From (L-R) James B. Jimenez, Director IV, Education and Information Department, COMELEC Atty. Aimee P. Ferolino, Commissioner, Commission on Elections Mr. Steven T. Tan, President, SM Supermalls Atty. Divine E. Blas-Perez, Director IV, Election and Barangay Affairs Department, COMELEC Mr. Bien C. Mateo, Senior Vice President, SM Supermalls

SM Supermalls and Commission on Elections (COMELEC) have officially teamed up to provide voters with more registration venues at SM. After signing a Memorandum of Agreement last August 27, 2021, at Level 2 South Entertainment Mall SM Mall of Asia, COMELEC has opened satellite registration centers in SM Supermalls nationwide. This gives the public a safer, more convenient option amidst the prevailing Covid health crisis.

COMELEC is the latest government agency to partner with the mall chain in bringing basic government services closer to the public. Other in-mall government services include Covid vaccination, international vaccine certification at the Bureau of Quarantine satellite office, National ID registration, passport application, and express services from government agencies such as PAGIBIG, PhilHealth, SSS, and GSIS.

With the approaching September 30 registration deadline, a good turnout of registrants is expected. In view of this, health and safety standards will be strictly observed. The voter’s registration center, like all other government service centers in the mall, is required to follow the Safety Protocols issued by the IATF. COMELEC shall limit the number of registrants per day. Execution of health declaration forms, checking of body temperature and physical distancing along with the mandatory face mask and face shields will be enforced on site.

47 SM Supermalls across the country will participate in this effort. This will help ease and unburden registration traffic in barangays, providing the public with a more convenient, faster, and safer way to access the registration process. For SM Supermalls with the Voter’s Registration Center and schedules, visit https://www.smsupermalls.com/whats-new/voters-registration-now-among-the-government-services-offered-at-sm/ or follow @smsupermalls on all social media accounts.

 

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In celebration of National Heroes’ Day, Vista Mall and Starmall pay tribute to courier and delivery riders

In celebration of National Heroes’ Day, Vista Mall and Starmall pay tribute to lucky riders of GetAll, Foodpanda, and other accredited couriers who are the malls’ partners for their online delivery services. The lucky riders, who were in the vicinity of Vista Mall and Starmall branches nationwide, were given grocery packs, as tokens for their hard work during the pandemic.

IFC eyes record investment in East Asia

PHILIPPINE STAR/ MICHAEL VARCAS

THE INTERNATIONAL Finance Corp. (IFC), a member of the World Bank Group, is ramping up investments in East Asia and the Pacific economies to as much as $5 billion to help the region rebound from the pandemic and combat climate change, a top official said.

“For the next year, we’re targeting long-term investments of $4-5 billion across East Asia and the Pacific [for a] green, resilient and inclusive growth,” IFC’s newly appointed Regional Director for East Asia and the Pacific Kim-See Lim told BusinessWorld in an interview on Aug. 20.

If realized, this meant the World Bank’s private sector arm will exceed its record-high commitments of $3.8 billion in the previous fiscal year (July 1, 2020 to June 30, 2021).

“Many of the countries around the region and globally, the governments are facing fiscal deficits and therefore have not a lot of headroom to help the region and the private sector recover, so it’s key part of our mandate to use private sector solutions to help the region go back stronger,” Ms. Lim said.

Addressing climate change and marine plastic pollution are also top priorities for the IFC in the region, which is highly vulnerable to natural hazards, she said.

Ms. Lim said they are targeting to expand the institution’s climate financing to 35% of its total long-term investment portfolio by 2025, and align 85% of new direct investments with the Paris agreement by July 2023.

The agreement aims to limit the global temperature rise to 1.5 degrees Celsius, which experts say would require the world to achieve net zero emissions by 2050.

Currently, 26% of all the IFC-supported projects are focused on mitigating the impact of climate change and addressing the marine plastic crisis.

By July 2025, Ms. Lim said all of the IFC’s new direct investments should be aligned with the Paris Agreement.

The IFC also aims to sustain and even grow its investments in the Philippines, after investing $399 million across four local companies in the past fiscal year, IFC Country Manager for the Philippines Jean-Marc Arbogast said in the same interview.

Further, Ms. Lim said the IFC is planning to finance more climate-related projects in the Philippines since it is one of the world’s most disaster-prone nations and most exposed to the impact of climate change.

“We are definitely looking for opportunities to do more things in the Philippines in climate finance. But we cannot give a definitive answer [on target investments], because it depends on the client and the opportunities that come our way,” she said.

Mr. Arbogast said the IFC has a number of projects in the pipeline that it is considering to finance across strategic priority areas on climate change, financial inclusion, infrastructure and human capital development.

He noted infrastructure is among the most underinvested sectors in the country as the existing financing is not enough to close the infrastructure gap.

The country could open up the infrastructure market and attract more investments in the sector to bring in not only additional capital, but also technical know-how, he said.

Internet connectivity and affordable healthcare are also among the sectors that are lacking in investments in the Philippines, according to Mr. Arbogast, who noted both are crucial during the ongoing pandemic.

Ms. Lim, the IFC regional director, said much of the economic and development gains the region achieved in the past 10-20 years were reversed during the pandemic.

“Governments have less and less fiscal space to provide more support for businesses, because of these very stretched resources. So all in all, I think there is much need for a bigger role for the private sector to play and this is where IFC will step up, to help the private sector in this recovery in the next few years,” she added.

Despite the impact of the pandemic, Ms. Lim said the IFC continued to balance its portfolio and businesses to sustain its financing to clients while managing the risks on its own balance sheet.

“Because we’re a global institution, we have the largest source of multilateral financing. That in itself provides some level of diversification, to the size of the portfolio and the geographies and the sectors that we have on our books,” she said.

In March 2020, the IFC launched an $8-billion fast-disbursing financing facility that pandemic-hit clients could access. It also has a $4-billion global health platform that aims to boost healthcare supplies in developing countries. — Beatrice M. Laforga

Bankers support proposed PDIC charter amendments

BW FILE PHOTO

By Luz Wendy T. Noble, Reporter

TOP BANKING GROUPS expressed support for the proposed legislation that would introduce changes to the Philippine Deposit Insurance Corp. (PDIC) charter, including a regular review of the maximum deposit insurance coverage for account holders.

In an e-mail, the Bankers Association of the Philippines (BAP) said it believes that the maximum deposit insurance “must be indexed to inflation and that the PDIC board must be allowed to make timely adjustments to this amount.”

The BAP’s position is in line with the provisions of Senate Bill (SB) 2365 and House Bill (HB) 8818. Both bills would require the PDIC board of directors to review the maximum deposit insurance coverage every three years and allow them to increase the coverage based on inflation and other economic indicators that may be relevant.

To fulfill this mandate, the PDIC board will be allowed to get the service of independent actuarial consultants and other experts to consider the feasibility and sustainability of a higher maximum deposit insurance coverage.

At present, the PDIC provides a maximum deposit insurance coverage of P500,000 per depositor for each bank.

The maximum deposit insurance coverage was last increased to P500,000 from P250,000 in April 2009, as part of efforts to boost depositors’ confidence amid the global financial crisis.

“An increase to the maximum deposit insurance must provide a balance between the PDIC’s sustainability and rationalizing the financial costs banks are incurring,” BAP said.

The House of Representatives passed HB 8818 in March, while SB 2365 is still pending at the Senate committee level.

The Chamber of Thrift Banks (CTB) also backed the proposal to raise the maximum deposit insurance coverage for depositors, but want assurance that the assessment rate under the original PDIC charter will be retained.

CTB Executive Director Suzanne I. Felix is referring to the contribution of PDIC member banks to the Deposit Insurance Fund (DIF), which is the source of the agency’s deposit insurance payouts.

This fund allows the PDIC to pay deposit insurance claims to depositors within a set turnaround time in cases of bank closures.

Member banks are assessed the annual flat rate of 1/5 of 1% of their total deposit liabilities. The assessments are collected semi-annually and form part of the DIF. This fund is managed through prudent investments as mandated by the PDIC charter.

“Increase in coverage will create stability for the banking system as this will boost public confidence/trust in the banking sector,” Ms. Felix said in an e-mail.

“However, banks are adversely affected by the pandemic, particularly their loan portfolios, hence cannot afford any increase in premium. Thrift banks, in particular, need to address the requirements of their MSME (micro-, small-, and medium-sized enterprises) clients who have also been severely affected by the crisis,” she added.

Also, Ms. Felix said the group supported the proposal for PDIC to become an attached agency of the Bangko Sentral ng Pilipinas (BSP) “for policy program and coordination.”

PDIC is currently an attached agency of the Department of Finance.

In a statement last week, the BSP said making PDIC an attached agency of the central bank is in line with recommendations of the International Monetary Fund. It said this move is expected to “enhance synergy among BSP, PDIC and other domestic financial regulators in promoting the country’s financial stability.”

Work on China-funded railway to start in March

By Arjay L. Balinbin, Senior Reporter

THE GOVERNMENT is aiming to start the construction of a China-funded rail line from Calamba, Laguna to Daraga, Albay by March next year, the Transportation department said.

The P142.48-billion design-and-build contract of the railway project, also known as the Banlic (Calamba)-Daraga segment of the PNR South long-haul project, is targeted to be awarded in October, the office of Transportation Undersecretary for Railways Timothy John R. Batan said in a statement sent to BusinessWorld on Aug. 26.

The Transportation department said the government of the People’s Republic of China has short-listed three bidders for the contract: China Railway Group Ltd. and China Railway Number 3 Engineering Co., Ltd. & China Railway Engineering Consulting Group Consortium Ltd. Joint Venture; China Road and Bridge Corp.; and Power Construction Corp. of China, Ltd.

Bid documents posted on the official website of the department showed that the 380-kilometer project involves the construction of 23 stations and a depot.

The partial operability segment is from San Pablo, Laguna to Pagbilao, Quezon. It is expected to start operations in the second quarter of 2022.

The full operation of the PNR project is slated for 2025.

In its invitation to bid, the Transportation department said completion of the construction works is required within 36 months.

Bidders should have completed a contract similar to the project within the last 20 years, it added.

“Bidding will be conducted through Limited Competitive Bidding procedures using non-discretionary ‘pass/fail’ criterion,” it added.

Apart from this PNR project, the other railway projects funded by China’s official development assistance are the P81.69-billion Mindanao Railway Project Phase 1 and the P50.03-billion Subic Clark Railway.

Tax effort improves in first six months

THE SHARE of tax collections in the country’s economic output improved to 14.74% in the first half but still below the pre-crisis level, the Department of Finance (DoF) said on Sunday.

In its latest economic bulletin, the DoF said the first semester tax effort, which is the share of tax collections to gross domestic product (GDP), went up by half of a percentage point from 14.19% in the first half of 2020.

However, this is still lower than the pre-pandemic level of 14.86% in the first semester of 2019.

“Tax collections improved partly due to tax reforms which include legislative measures and digitalization of revenue collections’ operations,” the agency said.

The P1.034-trillion taxes collected by the Bureau of Internal Revenue (BIR) between January and June was equivalent to 11.32% of GDP, up from its 11.15% tax effort in the same period last year.

The Bureau of Customs’ tax take of P302.74 billion contributed 3.31% to the overall economic output, higher than 2.95% a year ago.

The country’s two main collection offices saw revenues increase from year-ago levels by 8.11% and 11%, respectively, as economic activity picked up.

Other agencies also reported slightly higher tax effort at 0.11% in the first half from 0.1% the year prior.

Despite this, however, the share of overall state revenues to GDP still declined to 16.35% last semester from 16.94% a year ago due to lower non-tax revenues.

Revenues generated via other non-tax sources slid by 38% year on year to P147 billion during the period. This is equivalent to 1.61% of total economic output, down from 2.75% a year ago.

With a higher expenditure effort at 24.41%, the DoF said the government’s budget deficit widened to 7.86% of GDP in the first half from 6.53% in the same six-month period last year.

Economic managers capped the fiscal deficit at 9.3% of GDP by year’s end.

The DoF said the country should continue adopting fiscal reforms to sustain the upward trend of its tax effort, especially the remaining tax bills pending in Congress such as the proposed Real Property Valuation and Assessment Reform Act and the Passive Income and Financial Intermediary Taxation Act.

“Due to fiscal reforms, the country was able to fund the unprecedented fiscal requirements imposed by the pandemic and, at the same time, protect its strong macroeconomic fundamentals,” it added. — Beatrice M. Laforga

Rates of T-bills, T-bonds likely to move sideways on Fed bets

BW FILE PHOTO
THE BUREAU of the Treasury is looking to raise P250 billion from the domestic market in September. — BW FILE PHOTO

RATES OF government securities on offer this week may drop as the market waits for clearer hints from the US central bank on their plan to taper their bond-buying program.

The Bureau of the Treasury (BTr) is looking to raise P15 billion via the Treasury bills (T-bills) it will auction off on Tuesday, or P5 billion each in 91-, 182- and 364-day debt papers.

On Wednesday, the BTr will offer P35 billion in reissued five-year Treasury bonds (T-bonds) with a remaining life of four years and seven months.

The BTr moved the auction schedules as financial markets are closed today, Aug. 30, in observance of National Heroes Day.

Two bond traders said the average rates of the T-bills could move sideways from their week-ago levels amid ample demand for short-term debt.

Meanwhile, the first trader said the five-year T-bond’s average yield could range from 2.65-2.8% on Wednesday. The second trader gave a narrower forecast band of 2.75-2.85%.

The traders said the market will take their cue from the US Federal Chief Jerome H. Powell’s speech at the US central bank’s Jackson Hole symposium on Friday.

Mr. Powell said there has been clear progress toward maximum employment and that he was of the view that if the US economy evolved broadly as anticipated, “it could be appropriate to start reducing the pace of asset purchases this year,” Reuters reported.

However, he told the Fed’s annual late-August symposium in Jackson Hole, Wyoming, that the timing and pace of tapering does not involve a signal for when interest rates will begin to rise, a message the market perceived as being dovish.

“While there is no specific timetable or signals for tapering of bond purchases, investors may assume that tapering will likely not happen this year and that may drive the demand for notes at the belly of the curve,” the first trader said.

The BTr last week borrowed P15 billion as planned via its auction of T-bills as total tenders hit P50.867 billion.

Broken down, it raised the programmed P5 billion via the 91-day debt papers at an average rate of 1.077%, slightly higher than the 1.066% seen on Aug. 16.

The government also borrowed P5 billion as planned via the 182-day T-bills. The six-month debt was quoted at an average rate of 1.408%, inching up from the week-ago level of 1.407%.

Lastly, the Treasury made a full P5-billion award of the 364-day papers it offered as the tenor’s average rate eased to 1.612% from 1.617% the previous week.

Meanwhile, the last time the BTr offered the five-year bonds on the auction block on Wednesday was on May 6, when it made a full P35-billion award out of P75.716 billion in bids.

The papers fetched an average rate of 3.295% at that auction, lower than the 3.3% coupon quoted for the bonds when they were first offered on April 6.

At the secondary market on Friday, the 91- 182- and 364-day T-bills were quoted at 1.141%, 1.442% and 1.632%, respectively, while the five-year tenor ended at 2.965%, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

The Treasury is looking to raise P250 billion from the local market in September: P75 billion via weekly offers of T-bills and P175 billion from weekly auctions of T-bonds.

The government wants to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product. — B.M. Laforga with Reuters

Malaya plant’s unit eyed for power reserves

By Angelica Y. Yang, Reporter

THE new owner of the 650-megawatt (MW) Malaya Thermal Power Plant (MTPP) aims to secure an agreement with the National Grid Corp. of the Philippines (NGCP) that will allow the facility’s second unit to provide reserve power to the Luzon grid.

“For now, Unit 2 is targeted for ancillary services… We are applying as an ancillary services plant. As new private owners, we need to work on the transfer of all operating permits and secure an agreement with NGCP. We will be doing that [along with] the repair works,” Fort Pilar Energy, Inc. Chief Executive Officer Joseph Omar A. Castillo told BusinessWorld on Viber last week.

Fort Pilar Energy’s subsidiary, Belgrove Power Corp., completed the purchase of MTPP and its underlying land in Pililla, Rizal last week, according to state-run Power Sector Assets and Liabilities Management Corp. (PSALM).

“Assuming we secure [the] ASPA (ancillary services procurement agreement), we should operate Unit 2 by January 2022,” Mr. Castillo added.

PSALM on Aug. 25 said Belgrove paid a total of around P4.19 billion for the plant and the underlying land. Broken down, the purchase price of the assets totaled about P3.12 billion, while payment for MTPP’s remaining fuel inventory reached P1.06 million.

MTPP has two units: 300-MW Unit 1 and 350-MW Unit 2.

At the time of the plant’s turnover to Belgrove, both of the units were on outage, according to Mr. Castillo, as the first unit housed a damaged turbine, and the second unit had a damaged air pre-heater.

“For Unit 1, we will conduct a feasibility study first [before doing any repair works]… We are prioritizing Unit 2 for immediate repair. Our timeline for bringing back Unit 2 online is 12 weeks,” the Fort Pilar Energy executive said.

Unit 2 was built in 1978 and its last overhaul was done more than 20 years ago. Mr. Castillo said the plant will be undergoing overhaul works and preventive maintenance on all systems used in this unit.

“Unit 2 should be ready for testing and commissioning by November 30,” he said.

Earlier, Mr. Castillo said that once MTPP is repaired, it will be able to “supply electricity to the Luzon grid and help ensure sufficient electricity supply in anticipation of the upcoming 2022 national elections.”

The Department of Energy previously said that PSALM would pursue a negotiated sale for the plant, citing high maintenance costs and following years of failed auctions. It added that PSALM had shelled out an average of P1.2 billion a year to maintain the thermal facility from 2010 to 2019.

In a statement issued last week, PSALM’s President and Chief Executive Officer Irene Joy Besido-Garcia described the sale and turnover of MTPP to Belgrove as a “major milestone” since the state-run entity had been trying to privatize the asset for years.

“The amount of P4.19 million will be used by PSALM to settle the remaining financial obligations that PSALM absorbed from the National Power Corp.,” she said.

How to hold a wedding in a pandemic

PHOTO COURTESY O F TEDDY MANUEL

WITH the capital and its nearby provinces under Modified Enhanced Community Quarantine until Sept. 7, and with continuing uncertainty over whether there will be further hard lockdowns in the future, it’s getting harder to celebrate anything. Still, finding true love and binding it with a ceremony is always a cause for celebration, despite restrictions on physical gatherings. So, Themes & Motifs, an events planning company specializing in weddings, gave tips to make online celebrations special.

On Aug. 28, Sharon Fabian, Themes & Motifs managing director, together with Ronna Bonifacio, editor-in-chief of the events company’s magazine Inspirations.ph, presented “Lockdown Love: How to Give Your Online Guests a Special Wedding Experience” over Facebook Live.

“It’s as if they feel that they are there with you,” said Ms. Bonifacio, citing the goal of a successful online celebration.

Here were some of their tips:

• CREATE A FACEBOOK GROUP AND CONTENT PLAN

“I know couples have used Facebook Groups even before the rise of intimate weddings,” said Ms. Bonifacio, it is particularly useful nowadays. Here, one can post wedding countdowns that have information about the couple, announcements, dressing guidelines, and other information. One can also post videos and photos, which she noted, “are things we normally have in the reception.” Ms. Fabian said meanwhile, “This can be your community and support group through this difficult time,” with Ms. Bonifacio adding that, “It’s easier for us to create a Facebook group than it is to create a wedding website.”

• BE OPEN TO PRE-WEDDING PARTIES

Friends and family used to throw bridal showers or stag parties, but due to pandemic restrictions, these might be going out of fashion. Ms. Bonifacio said, “Gatherings right now are not allowed, but we’ve seen so many fun Zoom bridal showers.” For these, Ms. Bonifacio says one can have an e-numan (a drinking session online), or play online or trivia games with the rest of the party.

• SEND ONLINE GUESTS BOXED MEALS OR TREATS

While online weddings don’t actually require food, Ms. Bonifacio says, “They’ll feel not just that they were there at your wedding. It’s really just a personal touch; being able to reach out and say ‘thank you so much for making time.’” One of their suggestions was Bizoom by caterer Bizu, which even has vegan offerings (as well as their classics, namely the roast beef and the salmon). Ms. Fabian added that due to the online nature of the celebrations, “You can have as many guests as you want,” citing a wedding they did recently with 170 online guests enjoying 170 packed meals (impossible in real life under IATF pandemic guidelines).

• CONSIDER PRE-RECORDING SPEECHES

Speeches from family and the bride and groom are still the norm for weddings, but both suggest that to smooth over technical glitches, and prevent program interruptions, all parties with speeches can send a recording instead.

• DON’T UNDERESTIMATE VENUE TRANSFORMATION

Because one might discount celebrating physically anyway, one might think that the traditional flowers and swags of fabric can be dispensed with. “It’s good also to invest in decor,” said Ms. Fabian. “That sets the tone for your celebration.”

She suggests having a focal point in the venue (it could be a house, or, in one of her clients’ cases, a warehouse) that can be a backdrop for the wedding reception program. — JLG

Banks told to tighten controls as carnapping cases increase

THE BANGKO SENTRAL ng Pilipinas (BSP) told banks to tighten their Know Your Customer protocols amid a rise in cases involving carnapping syndicates that acquire vehicles through these financial institutions’ credit facilities under fake identities.

Memorandum No. M-2021-047 signed by BSP Deputy Governor Chuchi G. Fonacier reminded BSP’s supervised financial institutions to strengthen their controls and follow anti-money laundering (AML) regulations to prevent these criminal activities.

It said lenders should tighten their guard via strengthening procedures such as customer identification and verification, ongoing monitoring of customers and their transactions, and suspicious transaction reporting.

The BSP also told banks to ramp up their continuing AML training programs, including those focused on controls for partners and accredited car dealers.

“Carnapping syndicates may sometimes resort to identity theft, using an actual person’s name, address, and company profile, but with a different photo. These may be prevented by reinforcing the conduct of, among others, customer identification and verification procedures as part of the customer due diligence,” the memorandum said.

The BSP memorandum mentioned common schemes done by syndicates, based on information from the Philippine National Police-Highway Patrol Group.

Among these is the rent-pawn or rent-selling scheme, where a vehicle is obtained through a rent or lease contract. The culprit, or the lessee in this case, pawns or sells the vehicles using falsified documents without the consent of the lessor or the registered owner.

Another method is the pasalo scheme, where the culprit, using fake documents, sells a vehicle to a buyer who will assume the remaining obligations for the vehicle.

There is likewise a modus operandi dubbed as “labas casa scheme,” where a person will pretend to be a buyer of a vehicle and get an auto loan from a car dealership using counterfeit papers. The perpetrators will find a buyer for the vehicle using fake documents. — LWTN

First Gen plants to run on liquid fuel when Malampaya is out

FIRST Gen Corp. said three of its natural gas-fired plants in Batangas will be running on liquid fuel in October when the Malampaya offshore gas-to-power project shuts down for maintenance works.

These facilities are the 1,000-megawatts (MW) Santa Rita, the 500-MW San Lorenzo, the 97-MW Avion plants.

The Lopez-led firm added that its other gas plant — the 420-MW San Gabriel — will be switched off during the gas field’s temporary closure from October 2 to 22 since it can only run on natural gas.

“Santa Rita and San Lorenzo will operate using liquid fuel (condensate), which will be competitively sourced and imported to ensure their continued availability and operations despite the absence of Malampaya natural gas supply,” First Gen Executive Vice-President and Chief Commercial Officer Jonathan C. Russell told BusinessWorld through the firm’s communications department via e-mail over the weekend.

“Avion will also operate using competitively sourced liquid fuel (diesel) in the absence of natural gas supply from Malampaya,” he added.

During the gas field’s temporary shutdown, the three plants will provide 1,300 MW of available capacity. Broken down, around 750 MW will come from Santa Rita; 500 MW from San Lorenzo and 50 MW from Avion.

Mr. Russell said that the firm will be conducting scheduled preventive maintenance works on one of Santa Rita’s four units, which has a capacity of about 250 MW, during Malampaya’s 20-day closure in October.

“[However], San Gabriel can only run on natural gas and, and therefore, during the Malampaya shutdown, will not be available to run during the outage period,” he said.

He said liquid fuel in the form of condensate and diesel may be more costly than gas sourced from the Malampaya field but using these “will reduce the likelihood of yellow and red alerts” that cause price spikes in the power spot market.

“The onset of these yellow and red alerts due to a significant loss in generation supply leads to WESM (wholesale electricity spot market) price spikes that can be two to three times more expensive than running power plants on condensate and diesel. The use of these alternative fuels to keep Santa Rita, San Lorenzo, and Avion available during the Malampaya shutdown is beneficial to consumers by limiting what could otherwise be larger WESM price spikes,” Mr. Russell said.

First Gen’s Santa Rita, San Lorenzo, and San Gabriel plants deliver baseload power to the grid, while Avion provides peaking power.

Both the Santa Rita and San Lorenzo facilities sell their output to distribution utility Manila Electric Co. (Meralco) under a 25-year power purchase agreement with an 83% take-or-pay “minimum energy quantity” arrangement.

Meralco Head of Utility Economics Lawrence S. Fernandez told BusinessWorld on Viber last week that during the Malampaya maintenance shutdown, the distribution utility will work with the operators of Santa Rita and San Lorenzo plants to ensure that they will continue to provide their 1,500 MW of capacity to the grid, by running on liquid fuel.

Santa Rita is operated by First Gas Power Corp. while San Lorenzo is operated by FGP Corp.

Mr. Fernandez said Meralco also sources a portion of its power for distribution from the 1,200-MW Ilijan natural gas plant in Batangas, which is operated by South Premiere Power Corp. (SPPC), a subsidiary of SMC Global Power Holdings Corp.

“Meanwhile, for South Premiere-Ilijan, Meralco’s PSA (power supply agreement) with them has no outage allowance, so that Ilijan will continue to supply Meralco at contract rates during the Malampaya shutdown,” he said.

Asked about what consumers can expect come November, he said that their monthly power bills would depend on the power supply situation during the period.

BusinessWorld reached out to San Miguel Corp., which owns SMC Global Power, on how SPPC is preparing the Ilijan plant for Malampaya’s 20-day shutdown but has not received a reply from the firm as of deadline time.

“While past maintenance shutdowns have led to adjustments in the generation charge, a lot would still depend on the generation supply situation. If levels of supply and reserves remain comfortable, this will help mitigate the rate impact from the Malampaya maintenance,” Mr. Fernandez said.

According to the latest forecast of the Independent Electricity Market Operator of the Philippines, the Luzon and Visayas grids will have an average supply margin of 3,875 MW during the October billing month.

Average supply in October will reach 15,038 MW, while average demand will be 11,162 MW, the market operator said in a briefing on Aug. 20. — Angelica Y. Yang

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