Zamboanga City, the Sardines Capital of the Philippines, is groping in the dark.
A standoff between the city’s main power generator and distributor is disrupting Zamboanga City’s economy and trying the patience of the population. Brownouts lasting up to six hours daily are too much for the nine major sardines companies operating in the city.
Big seaweed production plants in Zamboanga City that make most of the world’s supply of carrageenan have also become a casualty in the tug of war between Western Mindanao Power Corp. (WMPC) and Zamboanga City Electrical Cooperative Inc. (Zamcelco).
WMPC of the Alcantara Group, which operates a 100-megawatt diesel power facility in Sangali, Zamboanga City, was forced to stop operation on Feb. 4, 2019 due to lack of fuel supply. WPMC can no longer continue advancing payments for diesel supply because of Zamcelco’s inability to pay its bills to the power generator.
City officials and businessmen were naturally outraged at the power disruption and pleaded with the Energy Regulatory Commission to intervene and resolve the problem.
“We are requesting the ERC to act decisively and justly on the pending dispute resolution to restore reliable and stable power to Zamboanga City,” said WMPC vice president for business development Joseph Nocos.
“The continued power outages are wreaking havoc on Zamboanga City, threatening livelihood, security, access to basic services and the conduct of peaceful elections. Canneries are reportedly spending up to 30 percent more in power costs as they have to run their generators to ensure uninterrupted production,” he said.
Zamcelco, according to WMPC, had consistently failed to make timely payments for the power dispatched to the co-op. By the middle of January 2019, Zamcelco had over P300 million in unpaid bills to WMPC, representing payment for power delivered in October, November and December 2018.
As diesel fuel constitutes between 85 percent and 90 percent of WMPC’s costs, it soon became untenable for the power generator to continue buying fuel from its suppliers without Zamcelco and its management firm, Crown Investment Holdings Inc., settling the obligations.
The Zamboanga City Council, meanwhile, has tried to mediate to resolve the deadlock. Crown Investment president Jomar Castillo in a meeting in early March with the council promised to solve the power problem in two to three weeks.
Councilor Rudy Lim blamed Crown Investment for failing to deliver on its promise to provide solutions. He said the act of unilaterally refusing to pay its obligations to WMPC that has caused the rotating blackouts was an act “tantamount to economic sabotage.” Castillo’s promise to solve the power problem has not been realized as of April 22, 2019.
Crown Investment, in a meeting with Energy Secretary Alfonso Cusi, proposed an interim arrangement to pay WMPC the amount of P220 million to cover fuel and variable costs, but not under the terms of the power supply agreement which it is contesting.
But WMPC said it could not operate its plant without the PSA because it would violate ERC rules that require an approved agreement before a plant can supply power. One solution offered was for Crown Investment to pay WMPC under protest, while contesting the PSA with ERC. Crown Investment did not accept the proposal.
Almost a month after Castillo promised to solve the power problem in three weeks, the City of Zamboanga still experiences power outages that last up to six hours. The generator sets that Crown Investment and Zamcelco have been installing were ineffective in restoring power.
“Without the reactive power support provided by WMPC, there will always be blackouts in the city despite the abundance of power supply in the Mindanao grid,” said Nocos.
“The immediate solution to the power problem in the city is to allow WMPC to operate its power plant because it is designed to provide not only capacity but stability to the grid as well—unlike Crown’s generator sets which are ineffective and expensive,” he added.
Crown Investment has been justifying its refusal to pay by claiming that the WMPC-Zamcelco PSA is not effective and that WMPC overcharged the electric cooperative.
“WMPC never over-billed Zamcelco. The amounts billed and paid for were calculated in accordance with the payment formula provided for in the power sales agreement between Zamcelco and WMPC,” said Nocos.
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