Building mini dams all over: From clean water to power

(Part 2)

Given the vast experiences of Spanish companies in building mini dams, it would be logical that our Government and the private sector should turn to Spanish infrastructure companies as potential business partners in this very important industry. Fortunately, one of the largest infrastructure companies in Spain, Acciona, is already investing in water facilities (as well as in bridges and other large infrastructure). It was Acciona that partnered with DMCI and First Pacific Metro in building what is now the longest bridge in the Philippine archipelago, the one connecting the town of Cordova in Cebu to Mactan island.

In the water sector, Acciona is heavily invested in the Putatan water treatment plant, the Laguna drinking water treatment plant, and the ongoing construction of the East Bay 2 drinking water treatment plant. These projects aim to provide safe drinking water to millions of people in the National Capital Region and surrounding areas (some 10 million inhabitants) by treating raw water from sources like Laguna de Bay. Additionally. Acciona has been installing solar power systems in rural areas through its “Light Home” program.

The Putatan II drinking water treatment plant is located in Muntinlupa and has been turned over to Maynilad Water Services, Inc. In 2020, it had a capacity of 150,000 cubic meters per day, serving up to 6 million people. The Laguna Lake drinking water treatment plant is built in a consortium and treats raw water from Laguna de Bay. It has a capacity of 150,000 cubic meters per day, supplying water to over 1.2 million people. Finally, the East Bay drinking water treatment plant is the most recent project and is being built in a consortium with Prime Metro BMD Corp. and Santa Clara International. It will have a capacity of 200,000 cubic meters per day, serving 2 million people in the Pakil, Laguna area. Acciona has also expressed interest in developing desalination plants in the Philippines.

Fortunately, there are already local water firms that can partner with foreign companies like Acciona. A good example is Summa Water Resources, a Philippine enterprise that is partnering with an LGU, the Lapu-Lapu City Government in the province of Cebu. This Public-Private Partnership project involves the construction of a desalination plant in Barangay Punta Engano. The private water provider will lay out distribution lines to supply water to consumers, addressing 60% of the water shortage of the city.

Summa Water Resources is owned by a young entrepreneur, Jose Soler, who is an alumnus of the university where I have been teaching for more than 50 years, the University of Asia and the Pacific (UA&P). I am encouraging Mr. Soler to consider partnering with Acciona to construct mini dams in some water-short islands like Siquijor in Central Visayas. This coming May, I am accompanying some 40 Filipino businesspeople on a road show to Spain for them to seek potential partners in a whole range of infrastructure projects, including mini dam projects.

Another Filipino entrepreneur who is investing in small hydro-electric facilities is the famous Ateneo basketball player Chris Tiu, who is CEO of Blue Energy Lower Labayat Hydro Power and Upper Tignoan Corp. which owns and will operate 1.4-MW and 1.9-MW mini hydropower plants in Real, Quezon. Tiu said that the power plants they intend to build will harness the abundant river waters to generate electricity in a clean and sustainable manner. It was projected that in the construction of the facilities, some 400 jobs would be generated. The two power plants are expected to power around 7,000 households and generate almost 17 gigawatt hours annually.

It is heartening to see young entrepreneurs venturing into the water and energy business.

A related development is that of the planned Northwin Global City of real estate giant Megaworld, headed by Kevin Tan (who is also an alumnus of UA&P). A notable feature of this pioneer central business district in the province of Bulacan is a stormwater detention facility for flood prevention, which is extremely necessary in one of the most flood-prone provinces in the Philippines. It is no coincidence that the flood control corruption scandal first erupted in the province of Bulacan.

By leading in investing in flood control in one of its major real estate projects, Megaworld is showing to the entire real estate sector that they can contribute significantly to privatizing flood control projects and take them away from the stranglehold of corrupt government offices.

I would like to see the day when practically all public works projects, except farm-to-market roads and other projects geared towards helping small farmers eke a better living, will be in the hands of the private sector.

We should encourage consortia of Philippine investors in real estate and water and energy facilities to explore possible joint ventures with Spanish companies like Acciona and others in putting up more mini-dam projects in the Pampanga River, the Pasig-Marikina River, and Laguna de Bay basins. As reported by Nyah Genelle C. de Leon in a Philippine daily, a recent study of the Japan International Cooperation Agency (JICA) revealed that these river basins are at risk of extreme climate events.

More extreme rainfall and prolonged dry spells are projected to hit the Pampanga River Basin, thus threatening the surrounding areas with more severe flooding and droughts. The Pampanga River Basin is the fourth largest in the country and flows through the central plain of Luzon, which contributes a third of the rice production of the entire country. Rapid urbanization and warming climate have increased the chance of annual flooding in the basin. The basin covers an approximate aggregate area of 10,540 square kilometers and extends over the southern slopes of the Caraballo Mountains, the western slopes of the Sierra Madre range, and the major portions of the central plain of Luzon. This vast area can provide opportunities for the likes of Summa Water Resources and Blue Energy Corp. They can look for more opportunities to build mini dams in the mountainous areas of the Pampanga River Basin.

More people would invest in hydropower if higher tariffs are allowed by government regulators. This was a message coming from Gertrude V. Roque, president of PhilHydro Association, Inc., on the sidelines of the 3^rd Philippine Hydro Summit recently. As reported by Sheldeen Joy Talavera in this paper, increasing tariffs would attract more investors.

Launched in 2011, the government’s feed-in tariff (FIT) program offers fixed payments per kilowatt hour to developers. This is also a uniform charge billed to all on-grid electricity consumers to support the development of renewable energy. During the previous FIT rounds, the rate for run-of-river (RoR) hydropower ranged from P5.90 per kilowatt-hour (kWh) to P6.0804 per kWh, depending on the scheduled completion date of each project. PhilHydro proposed the use of “actual average capacity” as the basis of setting the tariff. This sets the rate based on how much electricity a power plant actually generates over a period of time, compared to how much it could generate if it ran at full power continuously. PhilHydro is also asking for RoR hydro to be shielded from contingency costs, citing “constant exposure to weather climate change and natural disasters.”

The attractiveness of hydropower got a boost from a report that leading power producer, First Gen Corp., posted a nine-month attributable net income of $215.4 million, up 4% from the same period last year, as higher contributions from its hydropower portfolio offset declines in natural gas and geothermal earnings. The company attributed the hydropower gains to a higher starting elevation at the Pantabangan-Masiway plant, resulting in increased energy production.

Hopefully, similar high rates of return will be reaped by the smaller hydropower plants or mini dams. That way we will see a proliferation of these multi-purpose facilities that can simultaneously address the energy and water shortages all over the archipelago, while at the same time addressing the perennial problem of floods victimizing both human lives and properties.

(To be continued.)

Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.

bernardo.villegas@uap.asia