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DBP posts higher income in 2018

STATE-RUN Development Bank of the Philippines (DBP) reported a stronger net income in 2018, boosted by increased lending, particularly for infrastructure projects.

In a statement sent Friday, DBP said it made a P5.72-billion profit last year, up by 4.2% from the P5.49-billion bottom line in 2017.

Newly-appointed DBP President and Chief Executive Officer Emmanuel G. Herbosa said the higher net income came on the back of strong loan growth.

Total loans stood at P328.93 billion, which grew 12% higher than the P293.82 billion outstanding credit lines as of end-2017. A third of these loans were channelled to infrastructure and logistics, totalling P110.52 billion.

DBP is the eighth-biggest bank in the country, which has been assigned as the government’s infrastructure bank by the Duterte administration. It is largely meant to provide credit lines to construction projects, including big-ticket items on the “Build, Build, Build” pipeline.

New loans granted in 2018 reached P122.58 billion, more than double the P59.63-billion target for the year.

The second-biggest state-owned bank is also tasked to extend loans to micro, small and medium enterprises (MSMEs), social services and community development, and the environment.

MSMEs received P21.9 billion in total loans, while P10.34 billion has been channelled to environmental projects.

Meanwhile, bank assets rose by a tenth to reach P669.76 billion, putting DBP on track to hit P1 trillion assets by 2022.

Mr. Herbosa likewise reported a 15% increase in bank deposits to P474.44 billion, supported by higher placements from rural customers. Of the amount, P305.97 billion is held by state agencies and local government units.

The bank also attributed the rise in deposits to a wider branch network. DBP currently runs 137 branches nationwide, 789 automated teller machines, plus nine branch-lite units meant to serve rural communities.

Mr. Herbosa moved to DBP in March after serving as president of the Philippine Export-Import Credit Agency, taking the place of Cecilia C. Borromeo who was appointed to lead the Land Bank of the Philippines. — Melissa Luz T. Lopez

Peso climbs as BSP stays dovish despite easing inflation

THE PESO strengthened versus the dollar on Friday, bolstered by dovish cues from the Bangko Sentral ng Pilipinas (BSP) despite a slower-than-expected March inflation print.

The local unit ended the week at P52.10 against the greenback, eight centavos stronger than Thursday’s P52.18 finish.

The peso initially traded weaker as it opened at P52.28, and even posted an intraday low of P52.33-per-dollar. However, the currency appreciated later in the session to touch P52.09 as its best showing before settling at the closing rate.

Two traders interviewed by phone attributed the peso’s rebound to comments made by central bank officials in response to latest inflation data.

March inflation clocked in at 3.3%, the slowest since January 2018 to mark the fifth straight month of a decline.

“The peso initially weakened because the CPI (consumer price index) was lower than expected. Initially, the thought is there will be a rhetoric about rate cuts but so far, there’s none. There are comments about being careful,” one trader said.

Following the release of latest inflation figures, BSP Governor Benjamin E. Diokno said the central bank needs to “continue to keep a close watch” on price developments given concerns draw from a more severe El Niño and possible rise in world crude prices.

BSP Deputy Governor Diwa C. Guinigundo added that the BSP “needs to be very careful” about setting policy rates, noting that they need to see a clear downtrend before any adjustments are made. In a Bloomberg report, Mr. Guinigundo said they will only consider cutting rates once inflation hovers around three percent, or the midpoint of the 2-4% target band.

A second trader noted that market players likely took the initially weaker peso as an “opportunity to sell” their currency holdings.

“Inflation was lower but still within target,” she added.

Dollars traded on Friday totalled $964.52 million, lower than the $1.175 billion which exchanged hands the previous day. — Melissa Luz T. Lopez

PSEi rises on slower-than-expected inflation

By Arra B. Francia, Reporter

LOCAL equities climbed on Friday amid slower-than-expected inflation results for the month of March.

The benchmark Philippine Stock Exchange index (PSEi) rose 0.24% or 19.05 points to close at 7,873.18 yesterday, while the broader all-shares index rallied 0.3% or 14.37 points to 4,846.99.

“The optimism due to the lower than expected March 2019 inflation rate of 3.3% and developments on the US-China talks lifted the local market in today’s session,” Philstocks Financial, Inc. said in a market note.

The Philippine Statistics Authority reported on Friday that inflation slowed down to 3.3% in March, compared to February’s 3.8% and the 4.3% booked in the same period a year ago. This marks the lowest inflation rate since January 2018, and is the fifth straight month of deceleration from the high of 6.7% seen last September and October 2018.

The figure was also lower than the 3.5% median result from a BusinessWorld poll of 13 economists taken last week.

Papa Securities Corp. Sales Associate Gabriel Jose F. Perez however noted that the index remained flat despite better inflation results.

“The index ended in the green, but still flattish…Note that value turnover still remained weak at only P4.4B (ex-blocks) and how the index still failed to break out from the 7,900 level despite the better-than-expected inflation print of 3.3% for March,” Mr. Perez said in an email.

Markets overseas mostly got a boost from positive developments on the US-China trade war, which is reportedly in the final stages. The Dow Jones Industrial Average jumped 0.64% or 166.50 points to 26,384.63, while the S&P 500 index added 0.21% or 5.99 points to 2,879.39. In contrast, the Nasdaq Composite index slipped 0.05% or 3.77 points to close at 7,891.79.

Asian indices also ended mixed, with Japan’s Nikkei 225 firming up 0.38% or 82.55 points to 21,807.50. The Hang Seng index dropped 0.17% or 50.07 points to 29,936.32, while the Shanghai Composite advanced 0.94% or 30.28 points to 3,246.57.

Property was the lone counter that declined, slumping 0.15% or 6.20 points to 4,075.07. The rest went up, led by financials which advanced 0.57% or 9.82 points to 1,742.17.

Holding firms gained 0.45% or 34.50 points to 7,732.86; services inched up 0.32% or 5 points to 1,591.47; mining and oil was up 0.12% or 9.11 points to 7,734.29, while industrial added 0.05% or 6.20 points to 11,740.98.

Foreign investors turned net buyers once again, recording net purchases of P455.77 million, against Thursday’s net outflows of P243.86 million.

Turnover remained thin at P5.04 billion after some 2.02 billion issues switched hands, lower than the previous session’s P5.91 billion.

Advancers outpaced decliners, 117 to 81, while 49 names were unchanged.

FIBA-endorsed 3×3 tourney at SM Megamall

THE stage is set for the world’s first-ever Super Quest, the Chooks-to-Go 3×3 Asia Pacific Super Quest.

At stake in this FIBA 3×3-endorsed regional meet are two tickets for the 2019 FIBA World Tour Masters Doha, a ticket to the FIBA 3×3 Challengers Penang, two tickets to the FIBA 3X3 Challengers Kunshan, and a total of USD 50,000.

Two Philippine clubs are set to take part in this level eight-tourney that will take place at the SM Megamall Fashion Hall from April 6 to 7.

Champions of the Chooks-to-Go Pilipinas 3×3 President’s Cup Pasig Grindhouse Kings headline Pool C, with the quartet of Joshua Munzon, Taylor Statham, Troy Rike, and Serbian import Nikola Pavlovic facing Indonesia’s Jakarta West Bandits at 11:40 a.m. and Taipei’s Absolute 3×3 Basketball at 3:00 p.m. on Saturday.

“I think we are as ready as we can be. We have been preparing for the last three months for this,” said Statham. “Me, Troy, and Josh have played together and we have some great players who have been helping us out. We know that we can compete with the world’s best.”

President’s Cup runners-up 1Bataan Risers, fielding mainstays Alvin Pasaol and Santi Santillan, together with guest player Karl Dehesa and American import Travis Franklin, will take on the American-laden Anytours M1 of Hong Kong at 12:40pm and 19th-ranked squad in the world Tokyo Dime of Japan in Pool B.

“Ito na yung bunga ng pinaghirapan namin kaya expect niyo na lalaban kami,” declared Pasaol. “Hindi lang ang sarili namin ang nire-represent namin dito kung hindi ang buong Pilipinas.”

Composing Pool A are Mongolia’s Ulaanbataar, Australia’s TSV Reading Cinemas, and Korea’s Enerskin.

On the other hand, New Zealand’s Aotearoa, Vietnam’s Saigon Aces, and China’s SSLC complete Pool D.

The top two teams in each pool will advance to the knockout playoffs on Sunday.

For league commissioner Eric Altamirano, who has handled a lot of national 3×3 teams, the two Philippine squads are more than ready to compete against the region’s best and finest.

“I’ve never been in a 3×3 tournament na we have sent teams that are more prepared than these two. Before, last minute lang yung teams na pinapadala,” admitted Altamirano.

“We’ve given them enough time to be ready since they are playing in a real 3×3 league. I’m confident that they can compete with the international teams.”

NBL women’s league fires off this weekend

By Michael Angelo S. Murillo, Senior Reporter

FILIPINO women ballers get to showcase what they can do as the National Basketball League (NBL) launches its women’s league this weekend.

To fire off on Sunday at the Hagonoy Sports Complex in Taguig City, the WNBL builds on its thrust of giving opportunities to homegrown talents from various parts of the country following the launch of the men’s league prior.

For the inaugural season of the WNBL, seven teams will be competing, namely the Parañaque Lady Aces, Laguna Lady Pistons, Philippine Navy, Philippine Air Force, Taguig Lady Generals, Pampanga Delta Amazons, and the Cleon and Clyde Lady Snipers.

The teams are boosted by former and current national team players as well as ex-collegiate stars from various women’s leagues including the University Athletic Association of the Philippines, Women’s National Collegiate Athletic Association, and the NCAA South.

Organizers of the league said the WNBL is also geared towards aiding the Samahang Basketbol ng Pilipinas (SBP) in identifying talents as well as honing them to shore up women’s basketball in the country.

“We promised that in the NBL our approach is holistic, meaning we would not only cater to men. Through it we hope to support the programs of the federation (SBP) in discovering talents in women’s basketball as well. We will make sure that the WNBL will be different and something that Filipino basketball fans across the country will like,” said NBL chairman and president Celso Mercado at league’s formal launch on Thursday.

WNBL games will be shown live on Solar Sports, NBL Philippines Facebook page, and Net 25 Facebook page, and on a delayed basis on GMA News TV International, ensuring steady exposure for the league and the players not only in the country but also abroad.

Playing in the opener on Sunday at 1 p.m. are the Parañaque Lady Aces and Laguna Lady Pistons.

Inflation eases to 3.3% in March, slowest in 14 months

Inflation further eased for the fifth straight month in March, the Philippine Statistics Authority (PSA) reported this morning.

March’s headline rate of 3.3% — the slowest in 14 months since January 2018’s 3.4% — was down from 3.8% in February and 4.3% in the same month last year. It also fell within the Bangko Sentral ng Pilipinas’ (BSP) 3.1%-3.9% forecast for March and the 3.5% median estimate in a BusinessWorld poll of analysts.

Year-to-date, inflation averaged 3.8% which is within the BSP’s 2-4% target range for 2019.

Core inflation, which excludes commodities prone to volatile price swings, went down to 3.5% in March from 3.9% in February.

“The downtrend was primarily due to slower annual increase in the index of the heavily-weighted food and non-alcoholic beverages at 3.4% [from 4.7% in February],” the PSA said in a statement.

The PSA also noted slower annual markups in the indices of alcoholic beverages and tobacco at 10.8% in March from 12.2% in February; housing, water, electricity, gas, and other fuels at 3.4% from 3.7%; furnishing, household equipment and routine maintenance of the house at 3.4% from 3.8%; health at 3.9% from 4.2%; communication at 0.3% from 0.4%; and restaurant and miscellaneous goods and services at 3.7% from 4%.

The food alone index, meanwhile, eased to 3.1% in March versus February’s 4.2% and 5.7% in March 2018. — Carmina Angelica V. Olano

Feb. factory output down for third straight month

The country’s industrial production posted its third consecutive month of decline in February, the Philippine Statistics Authority (PSA) reported this morning.

Preliminary results of the PSA’s Monthly Integrated Survey of Selected Industries (MISSI) showed that February factory output – as measured by the Volume of Production index – contracted by 8.5% in February.

The February result marked a third straight month of year on year decline after the contractions seen in January at 2.9% and December 2018 at 9.3%. It was also a reversal from the 15.2% growth posted on February 2018.

Year to date, the factory output decline averaged 5.7% versus the 13% growth in 2018’s comparable two months.

“The decrement in February 2019 of VoPI was mainly influenced by the decreases in eight major sectors led by food manufacturing (-19.5%) and non-metallic mineral products (-12.0%),” the PSA said.

In comparison, the Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) was 51.9 in February, lower than January’s 52.3, but higher than February 2018’s 50.8.

A PMI reading above 50 signals improvement in business conditions from the preceding month, while a score below that point indicates deterioration.

Average capacity utilization – the extent by which industry resources are being used in the production of goods- was estimated at 84.3%. Eleven of the 20 sectors registered capacity utilization rates of 80% and above.  — Christine Joyce S. Castañeda

Manila International Auto Show 2019: Driving fun and function in the Philippines’ car and motor industry

By Bjorn Biel M. Beltran, Special Features Writer

Car lovers and motor enthusiasts rejoice because the country’s most anticipated car and motor show is back in town. Now on its 15th edition, with a theme of giving Filipinos the “Experience the Fun and Function” of seeing the best that the car and motor industry has to offer, the Manila International Auto Show (MIAS) launched at the World Trade Center Manila and North Wing, and will be a four-day event from April 4 to 7 from 10 a.m. to 10 p.m.

Aiming to “elevate the way Filipinos travel”, fun and function, the two primary qualities car and motor enthusiasts are looking for are highlighted at this year’s event with banner presentations of the latest and most impressive auto and motor innovations. Last year, the MIAS managed to house 150 companies, an impressive number of 305 car displays, 34 truck displays, and 12 motorcycle displays.

For MIAS 2019, the trade show experience promises to go bigger, vowing to give visitors with an insightful and productive look into the latest trends from the industry, as well as an entertaining time to boot.

For instance, among the manufacturers at the event, Suzuki Philippines dives deep into how it combines fun, functionality and comfort in designing the optimal driving experience of its most-valued vehicles. Among its latest range of vehicles available for trade show visitors to preview are the multifunction 7-seater Ertiga, highly-regarded subcompact sedan Ciaz, the 4×4 all-new Jimny, the popular hatchback Swift, the sedan Dzire, and SUV Vitara.

Volkswagen displays the best of German engineering and craftsmanship with a show of the various models of their Santana line: which include Pepper Grey Santana MPI MT accessorized with the Blaupunkt Infotainment System; a Reflex Silver Santana 180 MPI AT S with Blaupunkt; a Deep Black Santana 180 MPI AT SE with Blaupunkt; and a Red Rock Santana GTS 180 MPI AT SE with Blaupunkt. Other displays preview the Hunting Brown Volkswagen Tiguan 280 TSI DSG SE with Blaupunkt; a Misano Red Lamando 280 TSI DSG SEL, and; a Sunset Red Lavida 230 TSI DSG SE fitted with Blaupunkt.

Ford, meanwhile, display its lineup of vehicles that includes a first look at the first-ever Ranger Raptor, new Ranger Wildtrak, new EcoSport 1.0L EcoBoost, new EcoSport 1.5L Titanium, Everest, new Explorer, and new Mustang.

Hyundai unveils the latest models of its three-row SUV Palisade, while touting the latest in electric car technology with the Kona Electric, the manufacturer’s first-ever all-electric compact crossover.

On the first day of the trade show, Subaru debuts its XV GT Edition, a special edition of the highly popular crossover vehicle that was made in collaboration with renowned engineering company Giken Co. Ltd and Masahiko “Jack” Kobayashi, Subaru’s former Chief Designer (Head of Global Advanced Design Studio).

Auto Nation Group (ANG) marks its 15th year as the official importer and distributor of Chrysler, Dodge, Jeep and RAM vehicles, parts and accessories in the Philippines with the launch and preview of the all-new Jeep Compass at the 2019 MIAS.

Names such as Kia Philippines and The Covenant Car Company, Inc., the importer and distributor the Chevrolet and MG Philippines brands, as well as oil industry leaders like Petron Corporation are also making their presence known with their own striking displays. The launch and preview of the Compass dovetails the recent launch of the all-new generation Jeep Wrangler and heralds the company’s aggressive plans to gain a foothold in the growing premium SUV segment in the market.

Seeking to put itself above the typical car show, MIAS does not only hold car launches and product displays but also hosts an array of pocket events throughout its four-day run. Among these include the various car club displays that will be launched to the public at the World Trade Center Driveway.

Meanwhile, addressing the growing demand for commercial vehicles and large trucks, MIAS 2019 brings back its Monster Truck Display which is located at the North Wing side of the venue. On the opposite side of the spectrum, collectors are invited not to miss this year’s Miniature Die-Cast Car Collection Display.

Those looking to reserve, purchase, or simply try out the latest car models on display will have access to test drives outside the venue’s main hall. A signature component of all MIAS shows, back to carry out a series of awe-inspiring stunt performances is Guinness World Record Holder Russ Swift with his trusty Subaru cars.

This year’s MIAS also teamed up with Petron for another round of the Classic Car Competition which is expected to feature over a hundred of entries of the most creatively executed car setups.

With exclusive looks at the latest and greatest that the Philippine car and motor industry has to offer, as well as a fanfare of promotions, competitions, and presentations designed to drive the passion of the country’s most avid motoring enthusiasts, there is an abundance of “Fun and Function” to be experienced at the biggest car show in the country this year.

Tighter credit, trade row to cap growth

By Melissa Luz T. Lopez
Senior Reporter

THE UNITED NATIONS Economic and Social Commission for Asia and the Pacific (UN/ESCAP) on Thursday joined other multilateral groups in scaling down growth forecasts for the Philippines, even as it assured that expansion will be faster than last year as more infrastructure projects go live.

The UN/ESCAP slashed its Philippine growth projection for this year to 6.5% from 6.9% previously, saying that “monetary tightening” last year plus global trade tensions will dampen local prospects.

However, this means that growth will pick up from 2018’s 6.2% pace and will fall within the government’s 6-7% downward-adjusted goal.

Last year, the Bangko Sentral ng Pilipinas (BSP) raised benchmark interest rates by a total of 175 basis points (bp) to rein in inflation expectations, following price spikes led by rice and other crops.

This, in turn, pushed market borrowing costs higher, with the 4.75% key rate used as reference for market rates still at a decade high.

The BSP has yet to undo last year’s series of rate hikes, having decided last month that it needs to confirm that inflation’s slowdown since November last year will be sustained.

Meanwhile, global uncertainty given current trade tensions between the United States and China is expected to affect the Philippines by way of higher financial costs. Still, the impact is seen “moderate” for the Philippines, Singapore and Thailand given their more diverse export markets.

Moreover, increasing state spending will help boost prospects. “… [A] pickup in government investment compensated for the decline in private investment in a few countries, driven by spending on infrastructure (Brunei Darussalam, India and the Philippines) and mining (Mongolia),” according to UN/ESCAP’s Economic and Social Survey of Asia and the Pacific report.

The administration of President Rodrigo R. Duterte has earmarked over P1 trillion for new and ongoing infrastructure projects this year, but cannot roll them out yet given delayed enactment of the P3.757-trillion national budget.

Based on UN/ESCAP’s estimates, the Philippines will be the fourth fastest-growing economy in Southeast Asia next to Myanmar (7.2%), Cambodia (7%) and Vietnam (6.7%). The region is projected to clock a slower 4.9% expansion this year and in 2020 from 2018’s five percent climb.

In 2020, Philippine GDP growth is seen clocking in at 6.6%, also well within the state’s downward-revised 6.5-7.5% target.

The UN/ESCAP estimates compare with 6.5% this year and 6.4% next year given last January by the UN Department of Economic and Social Affairs, the UN Conference on Trade and Development and the five UN regional commissions (including ESCAP) in their joint World Economic Prospects 2019 report; the Asian Development Bank’s 6.4% for this year and next and World Bank’s 6.4% this year and 6.5% for next year.

Q1 GROWTH SURGE EXPECTED
Also on Thursday, analysts from the First Metro Investment Corp. and the University of Asia and the Pacific said they expect growth to have surged last quarter even if the 2019 budget has been delayed.

“The relentless fall of the headline inflation to below four percent (year-on-year), i.e., within BSP target, has provided much-needed good news,” they said in their joint The Market Call report.

“The continuing delay in the enactment of the 2019 national government budget, after all, has placed a downside risk to GDP growth in Q1,” they added.

“Consumer spending should begin to recover in Q1, aided by more money in consumers’ hands due to election spending and to weakness in the US dollar.”

The analysts said they see inflation on track to even drop below three percent by the third quarter.

Inflation averaged 4.1% as of February, slightly above the central bank’s 2-4% target band and three-percent forecast average for 2019.

Q4 2018 GDP expansion scaled up

By Lourdes O. Pilar
Researcher

THE ECONOMY grew faster than previously estimated in the fourth quarter of 2018, the Philippine Statistics Authority (PSA) reported on Thursday.

The PSA said its latest estimate shows the country’s gross domestic product (GDP) — which indicates the value of final goods and services produced within a country — expanded by 6.3% in 2018’s last three months, faster than the initial 6.1% estimate given in January.

According to the PSA, major upward revisions were made in trade and repair of motor vehicles, motorcycles, personal and household goods at 6.7% from the initial 5.9%, as well as public administration and defense, compulsory social security at 14.7% from 12.6%.

The fourth-quarter 2018 revision comes ahead of the release of preliminary estimates for this year’s first quarter GDP on May 9.

Even with the fourth quarter revision, the annual GDP growth for 2018 was kept at 6.2%.

“The elevated borrowing costs stemming from BSP’s (Bangko Sentral ng Pilipinas) aggressive rate hike cycle continued to stymie both consumption and capital formation, with the government needing to support growth through accelerated spending,” ING Bank NV-Manila senior economist Nicholas Antonio T. Mapa said in a statement.

Household spending growth in the fourth quarter was revised downwards to 5.3% from the 5.4% initially reported.

Likewise, capital formation growth in the fourth quarter of 2018 was updated to 4.9% from 5.5%.

For this year, Mr. Mapa said he expected a “strong rebound” in consumption given the slowdown in inflation to 3.8% in February from a nine-year-high 6.7% in September and October last year.

“However, government spending will be challenged given the ongoing budget delay, while capital investment may also struggle given the tightening liquidity conditions and as the effects of the BSP’s 175-bps (basis point) rate hike continue to sap momentum,” he added.

Corporate regulator wants listed firms to disclose related party transactions

By Arra B. Francia
Reporter

THE SECURITIES and Exchange Commission (SEC) wants publicly listed companies (PLC) to disclose material related party transactions (RPT) as part of efforts to better protect minority investors and improve corporate governance.

The corporate regulator is accepting comments for its draft Rules on Material Related Party Transactions for Publicly Listed Comments, which defines RPTs as a “transfer of resources, services or obligations between a reporting PLC and a related party, regardless of whether a price is charged.”

Such transactions will be considered material RPTs when the transaction amounts to at least 10% of a company’s total assets.

Related parties include “the company’s subsidiaries, affiliates and any party — including their subsidiaries, affiliates and special purpose entities — where the company exerts direct or indirect control or which exerts direct or indirect control over the company.”

Related parties may also pertain to a “company’s directors, officers, shareholders and related interests and their spouses and relatives within the fourth civil degree of consanguinity or affinity, legitimate or common-law, as well as corresponding persons in affiliated companies.”

Under the draft rules, the SEC will require a public company to adopt a groupwide material RPT policy. Guidelines should include the identification of related parties, coverage of material RPT policy, materiality thresholds, identification and prevention or management of potential or actual conflicts of interest, among others.

Listed firms must also file reports on any material RPT within three calendar days after conduct of the transaction. Such disclosures should include the complete name of the related party, the company’s relationship with the party, the financial or non-financial interest of the related party, and the transaction date.

In addition, the disclosure must state the type and nature of transaction as well as the description of assets involved, the contract price, and the rational for the transaction.

Companies must further disclose their material RPT policies on their company Web sites.

The draft rules seek to protect the corporate sector, the securities and investment instruments market, capital market participants and the investing public from abusive transactions and practices that may hamper business development in the country.

“We recognize how related-party transactions may create financial, commercial and economic benefits to the individual institutions and the entire group,” SEC Chairman Emilio B. Aquino said in a statement.

“However, we are equally aware of how such dealings could be abused to transfer assets and profits to controlling shareholders’ vested interests or seize bigger control in companies, among others, to the detriment of minority investors.”

The corporate regulator has proposed to impose fines of up to P40,000, in addition to a daily penalty of up to P400, for companies that fail to comply with the rules. A fourth offense will constitute the grounds for suspension or revocation of the company’s registration or secondary license.

The SEC said the new rules should help improve the Philippines’ performance in the World Bank Group’s Ease of Doing Business survey, especially on the indicator for Protecting Minority Investors. The Philippines improved to 132nd out of 190 economies in terms of protecting minority investors in the Doing Business 2019 report from 146th in the preceding report, even as its overall rank dropped 11 spots to 124th from 113th in the same reports.

Energy department maintains power outlook but Meralco flags ‘upward’ rate pressure

By Victor V. Saulon
Sub-Editor

THE DEPARTMENT of Energy (DoE) has kept its power demand forecast for the dry season despite four straight days of “yellow” alert notices this week, saying the thinning power reserves did not change its expectations in the coming months.

However, distribution utility Manila Electric Co. (Meralco) expects an “upward pressure” in the price of electricity per kilowatt-hour in the monthly bill of consumers for March and April.

“Sapat ang supply ng kuryente for our summer outlook (Electricity supply is sufficient for our summer outlook),” said Energy Undersecretary William Felix B. Fuentebella in a press conference at the department’s head office in Taguig City on Thursday.

“I don’t think it will change a lot [from our] present outlook. What we are proposing is a weekly update on how we can adjust our actions to address the situation,” he added, describing the yellow alert notices as “isolated” cases.

A month ago, the DoE said it expected Luzon to reach a peak demand of 11,403 megawatts (MW) in May. The March-June period, when the country will experience a “weak” El Niño, is expected to see a 30% reduction in hydropower capacity to 983-1,776 MW.

In the Visayas, power demand is expected to peak towards the end of the year at 2,299 MW, hence, the weather aberration should have minimal impact. Hydropower’s share in the area’s capacity mix is minimal at about 0.6%.

In Mindanao, peak demand is also towards yearend at 2,130 MW. Despite the possible significant effect of El Niño due to the 27.5% share of hydro in its capacity mix, the grid will remain stable due to the operation of large coal-fired power plants.

Lawrence S. Fernandez, Meralco vice-president and head of utility economics, said he expects the power generation charge for March to increase because of the three days of yellow alert notices during the month. Yellow alert notices are issued by system operator National Grid Corporation of the Philippines when reserve power thins as a result of the unscheduled outages of power plants.

This prompts Meralco to turn to the wholesale electricity spot market, where electricity prices are higher, to cover the deficiency.

Every time there is a reduction in reserves there is also pressure on the electricity prices at the spot market, said Andrea May T. Caguete, assistant manager for market information modelling at the Independent Electricity Market Operator of the Philippines.

NGCP is required to maintain a regulating reserve, which is ideally equivalent to four percent of the demand for the hour. The buffer covers small variations during normal operations.

A second layer or contingency reserve requirement is also allocated to immediately answer any reduction in supply when the largest power generating unit online — the 647 MW coal-fired power plant in Sual, Pangasinan — fails to deliver.

A dispatchable reserve — equivalent to the capacity of the second biggest operating plant, the second 647-MW unit of the Sual plant — is also readily available to replenish lost contingency reserve.

NGCP issues a “yellow alert” notice when the total of all reserves is less than the capacity of the largest plant online, which for the Luzon grid, is 647 MW. It issues a “red alert” notice when the contingency reserve is zero or a generation deficiency exists.

Meralco said its invokes its interruptible load program (ILP) when a red alert notice is issued. The scheme requires those in the program to voluntarily stop sourcing power temporarily from the utility and activate their own power generation sets.

The company said a total of 156 companies with a de-loading capacity of 546 MW have enlisted in ILP as of April 1.

A red alert notice has not yet been issued so far this year.

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