By Myrna M. Velasco
Transmission firm National Grid Corporation of the Philippines (NGCP) has already kicked off prequalification process on specialty contractors for its P51.696-billion Visayas-Mindanao Interconnection Project or VMIP.
According to the company, the initial phase of its contract award would be on installation of alternating current (AC) lines; and then the setting up of converter stations as well as laying down of overhead direct current (DC) lines on the Zamboanga side of the VMIP route.
“The next bidding is for the submarine cable contractor,” NGCP spokesperson Cynthia Perez-Alabanza said, while noting that prequalification has already been done on the initial award of specialty contracts for the project.
She stressed that “our commitment to the government (of project completion) is December 2020,” emphasizing that even prior to the provisional approval of the Energy Regulatory Commission (ERC) on the project, there were already pre-construction preparation works at the chosen VMIP link-up path.
Alabanza indicated that the project’s funding may still change depending on the final approval that the ERC will be rendering on their project application.
The ERC had given provisional go-signal last year on the feasibility study that NGCP had lodged for the VisMin transmission interconnection; that once completed, will finally loop all the three power grids of the country.
In that interim regulatory approval, NGCP proposed the multi-year capex for the VMIP at: P9.705 billion in 2018; P35.383 billion in 2019; P1.725 billion in 2020; and P4.882 billion in 2021.
ERC Spokesperson Floresinda B. Digal has noted that “all interim projects are subject to optimization, meaning the cost to be allowed for recovery may not be the same as the one proposed by the applicant (in this case NGCP).”
She added that since the VisMin project is already outside of the company’s reset process under the performance-based regulation (PBR) scheme, NGCP may advance the funding but it can only recover costs incurred in later applications.
As assessed by the power industry regulator, for NGCP to finish the project in four years, “it is necessary to start the project implementation in 2017 in order to complete the project just in time to address the expected power supply concern by 2020.”
Specifically, it was noted that Visayas could experience supply shortfall in the next few years, but when the transmission interconnection would be concretized, that can be met by the portended capacity surplus that will either be coming from Luzon or Mindanao.
“The deficiency of supply in Visayas may be supplied by importing power from Luzon or Mindanao. Simulations were conducted to ascertain if the shortfall of Visayas can be supplied by Luzon and/or Mindanao,” the ERC stressed.
Additionally, the grid interconnection project would serve as a viable support to the setting up of Wholesale Electricity Spot Market (WESM) in Mindanao; as well as in managing the variable renewable energy (VRE) technologies in their integration into the electricity system.
“With the establishment of the electricity market in Mindanao, the implementation of VMIP would create a more liberalized and competitive market for the country,” the ERC said.