The budget department slashed the funding for the National Electrification Administration (NEA) for 2019 by approving P 1.163 billion, 77 percent lower than the proposed budget of P 5.2 billion.
As a result, NEA said it will be hard-pressed in accomplishing its mandate to energize remote areas to achieve total electrification for the country.
The budget department approved only P 1.163 billion, which is 36 percent lower from NEA’s working budget of P 1.817 billion in 2018.
In a report by Philippine News Agency, NEA Administrator Edgardo S. Masongsong was quoted as saying they were encouraged to submit their initial budget proposal to support the mandate of President Rodrigo Duterte to provide all Filipinos access to electricity.
Around 1.9 million households are without electricity in 17,000 sub-villages as of last June 30, according to the Philippine Statistics Authority.
In order to energize all 17,000 sub-villages, NEA will require P 23 billion. According to Masongsong, only 775 sub-villages will be energized with the approved budget.
Masongsong said NEA will have to use other means in order to implement its Rural Electrification Program (REP), such as the financial benefits to host communities of power generators as outlined by Energy Regulation (ER) 1-94.
Under the regulation, all generation companies and/or energy resource developers are required to set aside once centavo per kilowatt hour of their total electricity sales as financial benefits to host communities.
However, there are limitations such as only 50 percent can be used for REP while the other half goes to local governments to finance their livelihood and environmental projects. Only host communities of generating companies can have access to ER1-94.
Masongsong said that another strategy is to allow electric cooperatives (ECs) to implement the REP by including it in their capital expenditures, which will be funded by internally-generated funds or loans.
This has yet to be approved by the Energy Regulatory Commission, which might entail rate increases to recover the cost, he added.
ECs can also attract private sector participation to REP by forging joint ventures with investors, and they can waive the responsibility of energizing unviable areas to qualified third parties, he told PNA.
Six out of 995 areas have so far attracted takers where microgrids are being developed.
Masongsong said NEA can still fulfill its mandate but it would be more challenging due to limited funds.
“Implementing rural electrification is still possible but on a longer timeframe,” he added.