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Monday, 15 November 2010 04:52

STOP SALE OF MINDANAO HYDRO PLANTS

 

By Jess Dureza

8 November 2010

 

Under the so-called EPIRA LAW,  government will have to sell the Mindanao power plants by 2011.That's a few months from now. These will cover principally  the Pulangi 1V hydro plant in Maramag, Bukidnon and the Agus  hydro power plants around Lake Lanao. It’s part of the privatization campaign of  government under the concept that it is best that government turns over   to the private sector operations of the power generation sector  as the latter is more efficient. Power distribution is now, by the way privatized, and in the hands of the National Power Grid Corp, a private corporation.  Another  reason advanced is that the proceeds of the sale of these plants to private buyers can pay off huge debts piled up over many, many years by  the government owned National Power Corporation. . There is also this argument that the reason the power investors are hesitant to come to Mindanao and invest is because the cost or price of power is too low and private investors cannot compete   for as long as Pulangi and Agus plants are in government hands.

 

Well and good.

 

However, there are sectors now clamoring that we must ask our congressmen in Mindanao to move for the amendment of the EPIRA LAW so that the mandated sale of these assets will not take place in 2011 which is just a few months around the corner.

 

Already, I am getting information that there are many investors who are already doing due diligence and checking on data on their plan to participate in the bidding for the sale of these assets. At the same time, there is a growing clamor from Mindanao residents that  selling those “prized gems”of Mindanao will deprive its people of the benefits and comparative advantage of being home  to those rich and bountiful natural resources.

 

During my rounds during the height of the El Nino last year and while the hydro plants were not generating their normal capacities due to the low water levels, there were already varied voices saying that it will be a big mistake if we sell the plants. The biggest argument is that the take over by private sector groups will definitely increase the price of power in Mindanao. Private investors are profit oriented and  are definitely propelled by business interests and profits hence increase in  price of power is inevitable if they take over.

 

Keeping the hydro plants in government will definitely moderate any price adjustments of power. The Pulangi and Agus plants will give a mix to the price of power that will keep it lower than what consumers in Visayas and Luzon pay for their electricity.

 

My view is: let’s not give away our prized jewels that are uniquely found only in Mindanao.  If there are investors, let them invest in the putting up of new  generating plants, whether thermal or hydro. But let’s not give away those that are already our prized possessions.

 

I was told by some technical people when I visited the Pulangi plant in Maramag that the possible selling price of the Pulangi plant can be recovered only within the period of 12 to 24 months of operations.  My figures may not be accurate but if we sell the plant for 2 billion pesos, it will generate income for the new owners and recover the whole  2 billion buying price  within the next 2 years. What a prized catch!

 

On another point. About 53% of Mindanao’s power come from hydro plants which rely on water. Climate change and the possibility of frequently recurring El Ninos will make Mindanao remain at the mercy of mother nature. We saw this last time. Perhaps, there is a need to review our power generation concepts and examine whether keeping the hydro power dominant in Mindanao is still a valid thing. Or we have to give thermal plants more priority. But then, the cost of power will have to be  tuned to this new concept. Thermal plants run on fuel hence they cost more. Indeed,we need to go back to the drawing boards and plan things out.

 

But whatever it boils down to, selling the Pulangi and Agus hydro plants will be a big loss to us Mindanaoans.

 

Call or write our Mindanao congressmen. I’m sure they will listen.  ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 

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Last Updated on Monday, 06 December 2010 09:22
 
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Friday, 05 November 2010 11:49

 

MINDANAO BANANA IN CRISIS


BY JESUS G. DUREZA

The banana industry in  Mindanao today is in a state of  shock.

All because suddenly, the Iranians  are no longer buying   Philippine-produced bananas as an aftermath of a political issue involving US allies and United Nations sanctions against Iran. This has something to do with  Iran’s nuclear intentions that supposedly threaten the whole world.  The  blockade results in  the banning   of our bananas. And we know that Mindanao is the hub of the country’s banana industry. Necessarily, we in Mindanao suffer the most.

I have been reading lately materials and information coming from the banana industry players and it is projected that about 30 to 32  million boxes of bananas  from Mindanao will be shut out of the market annually.  Iran alone buys 50% of the total volume for the Middle East which accounts for about $180 million in a year.

“Never have we factored in the political dimension in all our industry projections,” Steve Antig lamented when he confirmed  that yes, the industry as of now is in a state of shock. Steve is the head of the association of banana companies in Mindanao.  What the future holds is even unclear. Although there are  reports coming out of the diplomatic sources saying that Philippine bananas and pineapple are not banned in Iran, the fact remains that the Iranian government has stopped issuing import permits, hence virtually shutting out Mindanao’s two flagship export products.

So, don’t be surprised if you have banana growers whom you know who will start delivering complimentary boxes of Cavendish bananas beginning now .  My friend, Gov Manny Pinol sent several boxes in handsome boxes and plastic wrappings. Other growers will have to sell to the local market but the problem is that local consumers’ taste buds  are not attuned to the Cavendish variety. They prefer the local “lakatan”  or “binangay” .  So, expect a sea  of Cavendish bananas in million hands either rotting or flooding the markets or sliced and dried as animal feeds. Or cooked in some household as temporary rice substitute, etc.

Already some banana companies have used the occasion to make hard decisions like closing plantations that are already problematic. I was told that Sumifru announced the closure of a 300 hectare farm. Marsman also is almost giving up on a 500 hectare farm in Comval and is looking for new investors to take over.

But all is not that bad, for the moment at least. The big companies like Dole, Stanfilco, Del Monte, Unifrutti, etc are still playing “big brother” roles to small growers. The big losers here are the so-called “pole vaulters”, the small growers who abandoned their contracts with the big companies after being tempted and seduced  with higher buying prices by new players.  They have nowhere to go with the present situation. Some industry officials called this “karma”.

If the situation does not improve by end of November or December, then about 64,000 banana workers are going to suffer.  If no solution comes six months from now, the damage to the industry will be irreparable.

My sense is that this is only a temporary setback. Mindanao produces the best bananas. And whatever the outcome of  this political tug-of –war between the US and its allies  and Iran, businessmen and groups will eventually come around and still buy our bananas. I heard individual companies are now shipping quietly and in small volumes just to test the waters. Some enterprising Chinese buyers who are seeing a glut are apparently positioning to take advantage of the situation.

What is important now is how to bridge this setback to the next recovery stage either by returning to  the same market or looking for other markets elsewhere.   How do we hold on in the meantime until  this crisis  ends?  How do we help the thousands of families who are directly affected?

The Dept of Foreign Affairs, the Department of Trade and Industry and the Department of Agriculture, the Labor Department  among others must jump into the fray. This is another crisis situation that must be handled decisively. Although the affected  business sector must act fast, we have to provide some safety nets to the 64,000 families who are in jeopardy. ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 

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Last Updated on Monday, 06 December 2010 09:21
 
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