NPC may distribute brownouts to 1.3M off-grid consumers

transmission lines (from meralco)

The National Power Corp (NPC), a state-owned company, has announced plans to distribute power interruptions equally among 1.3 million households in off-grid areas due to constraints in the “corporate operating budget.” 

NPC President Fernando Martin Y. Roxas warned of a potential scenario of “equal misery” in the event that the company fails to secure additional funding to improve its operations, particularly in procuring the necessary fuel to power affected off-grid or island-grid locations.

Despite this, Roxas reassured the public that NPC is making efforts to secure additional funding. However, he noted that at some point, the company and its consumers may have to bear some of the costs themselves.

“To avoid rotating power interruptions in the islands and off-grid areas, we are taking steps to fund a sustainable solution to address the financial woes that are crippling the operations of the NPC,” Energy Secretary Raphael Lotilla said in a statement. 

Under a worst-case scenario, NPC Manager for Strategic and Business Planning Division Odette Rivero warns that even off-grid areas that currently have 24-hour electricity services may face reduced supply and be limited to just 15 hours of power. 

Moreover, off-grid power utilities that currently operate for 16 hours a day may see their electricity services reduced to just 12 hours. Meanwhile, those with the lowest operations may only be able to provide their customers with 5 hours of electricity.

Rivero stated that the supply cuts can only be prevented if NPC receives additional funding to purchase enough fuel to last until December 31, 2023.

She indicated that NPC is facing a funding deficit of P3.713 billion specifically for fuel procurement, adding that the company requires a total budget of P11.484 billion, but only has access to P7.526 billion.

NPC is projected to need a total of 150,555 kiloliters of fuel for the entire year, however, only 100,608 kiloliters have been procured and are set to run out by August 31. This creates a fuel deficit of 49,947 kiloliters. 

The company’s total corporate operating budget for the year is P41.850 billion, but with an upward adjustment in fuel procurement costs (at P74.3475 per liter), NPC will require additional funding of P19.505 billion, compared to the P22.345 billion allocated in the General Appropriations Act.

In addition to seeking a P5.0 billion loan, NPC is also looking for national government subsidies from the Department of Budget and Management (DBM), reimbursement from the Department of Finance (DOF) for expenses related to the Bataan Nuclear Power Plant (BNPP), potential aid from electric cooperatives (ECs) and local government units (LGUs), and prompt approval of over P30 billion in pending UCME adjustment applications with the Energy Regulatory Commission (ERC).

Energy Secretary Raphael P.M. Lotilla stated that the regulatory action on NPC’s pending universal charge for missionary electrification (UCME) applications is crucial, as it is currently providing the subsidy. However, there are unacted applications dating back to 2014 worth P30 billion, which affected the finances available under UCME.

The energy chief added that even if the Energy Regulatory Commission (ERC) manages to approve the pending UCME applications, it will be the on-grid customers who will have to bear the burden. The national government is working to find a balanced solution in which all parties share the responsibility of addressing the situation.