DBP: Sustaining electrification program in the countryside

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The Development Bank of the Philippines (DBP) has been involved in financing various rural electrification projects in the country and one of these is the sustainable electrification program for the province of Oriental Mindoro.

Power generation in off-grid areas like Oriental Mindoro is usually subsidized by the National Government through the ‘Universal Charge for Missionary Electrification’ as the true cost of electricity is not affordable for consumers. Thus, the challenge is how to bring down the cost of electricity in the province which could be done through the development of renewable energy projects as well as increased energy efficiency for the dilapidated, inefficient diesel power plants of the National Power Corporation (NPC).

According to the ‘Distribution Development Plan’ of the Oriental Mindoro Electric Cooperative, Inc., the province will need at least 44 MW by 2016 to address its peak load demand. To help meet this requirement, DBP extended an aggregate loan amount of Php 2.4 Billion (USD 50 Million) equivalent to 80% of the total project cost to the following: Oriental Mindoro Electric Cooperative, Inc., for the development of the 5.1 MW Linao-Cawayan mini-hydropower project (Upper and Lower Cascades); and Ormin Power Inc., for the development of the 10 MW Inabasan mini-hydropower project (MHP) and the 9.83 MW Bunker C-fired Packaged Power Station. Total capacity of these projects stands at 24.93 MW and to date, only 10 MW mini-hydropower plant is still under construction with the other power plants already operational.

On an annual basis, these renewable energy projects and a more efficient diesel power plant are expected to yield positive economic and environmental impacts such as reduction of greenhouse gas emission by 51,236.36 tons of CO2; reduction in fossil fuel oil equivalent to 195,451.97 barrels; and reduction in government subsidy by as much as Php341.61 Million (US$7.12 Million). In terms of rate impact to member-consumers, the power projects will result to Php0.5066/KWh (US$0.01/KWh savings for the 10 MW Inabasan MHP alone, according to the Energy Regulatory Commission’s assessment, which will benefit a population of 785,602.

Overall, these power projects continue to provide a positive contribution to Oriental Mindoro in terms of making electricity reliable, affordable, and sustainable, which was made possible through DBP’s long-term financing and technical assistance support.
DBP’s Province of Oriental Mindoro Sustainable Rural Electrification project was winner of the 2016 ADFIAP Outstanding Development Project Awards under the Local Economic Development Category.

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