Finance Secretary Carlos Dominguez III said the rehabilitation of the Agus-Pulangi hydroelectric power plants in Mindanao and the construction of a liquefied natural gas (LNG) facility to replace the Malampaya natural gas reserves before these are depleted will spell the country’s stable power supply as the Duterte administration embarks on a massive infrastructure program over the medium term.

Dominguez said the government is already in talks with potential Japanese investors to supply LNG receiving stations as part of the integrated LNG facility project that the Department of Energy (DOE) and Philippine National Oil Company (PNOC) are building ahead of the depletion of the Malampaya gas field by 2024.

The Malampaya gas field off Palawan supplies up to 50 percent of the energy requirements for Luzon.

For Mindanao, Dominguez said the government will rehabilitate the Agus power plant complexes in phases, starting with the plant with the oldest generating units, and has decided to include the first stage of the rehabilitation in the second basket of projects for possible financing by China through Official Development Assistance (ODA).

Complementing these projects is the move by the Macquarie-backed Philippines Renewable Energy Holdings Corp. (PREHC) to invest P64.5 billion in the Energy Development Corp. (EDC)’s long-term clean energy initiatives in the country, Dominguez said.

“For the medium term, we are upgrading or rehabilitating the Agus power plants. They are operating at roughly 60 percent of their capacities right now. And we have sought financing — ODA financing — from China to implement the said power plants in Mindanao,” Dominguez said at a recent investment forum.

Dominguez also said that “by the mid-20’s, when we are going to run out of the Malampaya reserves, we are ready with our LNG facilities.”

“We are already talking to Japanese businesses and the Japanese government to set up LNG receiving stations. So those are the two big projects,” he said.

Earlier, Dominguez said the government will require approximately P54 billion or about $1.07 billion to finance the rehabilitation of the five (5) Agus-Pulangi hydro power plants to increase their capacities and extend their service life by 30 more years.

The government will undertake the rehabilitation of the plants to take advantage of the expected power oversupply in Mindanao in the next three years.

National Power Corp. (Napocor) president Pio Benavidez reported earlier to Dominguez that the Agus 6 facility will be rehabilitated first as it is the oldest facility, with the biggest output. This would be followed by Agus 2 and Agus 7.

The rehabilitation of Units 3 to 5 of Agus 6 will cost around $172.5 million; Agus 2, $207 million; and Agus 7, $62.10 million.

Benavidez said these facilities are currently operating at around 60 percent of their over 900-megawatt rated capacity.

The replacement of old transformers as well as the old electrical equipment to make these facilities more reliable are part of the rehabilitation plan for the power plants.

The rehabilitation could take place from four to five years and would increase the total capacity by an average of 10 percent for each facility.

After the rehabilitation, total capacity would reach more than 1,000 megawatts, Benavidez has said.

The LNG hub, which will include receiving and distribution facilities, is expected to cost $2 billion to build, according to earlier statements by the DOE.

Last Oct. 6, the PHERC and EDC celebrated the formal closing of their P64.5-billion deal, which Dominguez said, was a “strong vote of confidence” in the investment-led and inclusive growth strategy undertaken by the government under the Duterte watch.

Dominguez said that more than being good for the economy, this long term investment in the country’s energy sector is also “good for the environment” as it would help build the country’s renewable energy base.

PREHC is owned by a consortium of investors with funds managed by Macquarie Infrastructure and Real Assets (MIRA), the world’s largest infrastructure assets manager, and Arran Investment Pte. Ltd., which is an affiliate of Singaporean sovereign wealth fund GIC.

This consortium owns and operates a combined installed capacity of over 11 gigawatts in renewable energy assets worldwide.