The lack of fiscal space, more known as the budget deficit, is preventing government from going all out in upgrading the country’s transmission and distribution lines, according to the Department of Energy (DOE).
This has forced government to seek support from international financial organizations as the economy transits to clean energy and as it upgrades and modernize its transmission and distribution systems.
Energy Secretary Raphael Lotilla, at the event hosted by the World Bank (WB) on Thursday, said the government looks to address transmission congestion by adding transmission lines or avoiding subsidies that cause the build-up of excess capacity.
“Once the government has fiscal space, the government will revisit and re-evaluate financing investment in transmission. Financing investment will be separate from the regulatory structure of transmission tariffs, and investment in transmission expansion offers enormous potential benefits for efficiency by increasing access to low-cost generation, improve reliability, and mitigate counterbalancing market power.”
Energy Secretary Raphael Lotilla
While Lotilla did not elaborate, he said the DOE needs to partner with the World Bank and the Asian Development Bank (ADB) to achieve the objective.
He acknowledged the fiscal space does not yet allow for upgrades and modernization but at the same time said “the time for investing in transmission is now and (that) this is an ongoing conversation we have with the World Bank and with the ADB.”
“I hope that they will catch up with us. I pose the challenge for our development partners therefore to be up to speed in delivering the needed transmission capabilities,” he further said.
According to Lotilla, the government sees “synergy” in the build-up of infrastructure in other sectors which are “opportunities” for building new transmission lines “along with the rights-of-way” solutions that have been identified for new build-operate-transfer(BOT) and public-private partnership (PPP) projects of the Department of Public Works and Highways.
“We can actually lower the infrastructure costs by building up in parallel the transmission lines as well as the tollways that are going to be built. We also look forward to the upgrading completion with adequate funding from our development partners of the backbone in the major islands.
“I’m not only talking about the completion of power infrastructure in Palawan and Mindoro but in islands like Masbate, Catanduanes, Siquijor, Guimaras, Basilan, Jolo and Tawi-Tawi,” Lotilla said.
He explained the various islands currently do not have the power backbone needed to achieve full electrification across the Philippines.
