THE National Transmission Corp. (Transco) wants to ask financial assistance from the World Bank (WB) or the Asian Infrastructure Investment Bank (AIIB) to be able to pay renewable-energy (RE) developers P8 billion worth of financial obligations.
“There is no amount yet for the loan, but it should be something to cover the backlog, which is about P8 billion already. I am looking at P15 billion to P20 billion, if interest payment will be included since the loan could be availed of at zero interest,” Transco President Melvin Matibag said.
Incentives are provided to RE developers in order to encourage participation in the development of RE sources. These incentives are provided under the Feed-in-Tariff (FiT) system, in which RE developers are offered a fixed rate per kilowatt-hours (kWh) for electricity generated by their projects over a period of 20 years.
The RE developers’ entitlement is taken from a FiT Allowance (FiT-All) billed to all on-grid electricity consumers. In short, consumers are the ones who shoulder the FiT rate through the FiT-All, which appears as a separate line item in power distributors’ bills.
The Transco, which administers the FiT-All, files a yearly application before the Energy Regulatory Commission (ERC).
However, unwarranted delays in the ERC approval was the reason Transco was not able to pay the RE developers. Because of these delays, consumers have to pay consequential costs—the P6.6-billion backlog in FiT rate payments owed by the government to RE developers for the year 2016, including P230 million in interest payments alone.
Matibag said the amount has reached P8 billion to date.
“Backlog is caused by a combination of a lot of things, though not attributable to Transco because we are only the administrator. Still, we are looking for a solution,” he said.
In December 2015 Transco sought to increase the FiT-All rate for 2016 to 12 centavos per kWh. Before the application was approved, Transco filed another application in December 2016 to cover for the 2017 FiT-All rates, this time asking to further hike the rate to 22 centavos per kWh.
“We are preparing also for 2018, but we are looking for funds so that we can cover the backlog without interest the 30 years to 40 years of loan payment. The World Bank and AIIB have untouched energy funds for renewable energy that could be availed of,” Matibag said.
This plan, Matibag added, was already approved in principle by Energy Secretary Alfonso G. Cusi.
“It’s also being welcomed by Finance Secretary [Carlos G.] Dominguez [III],” he said.