Audit of Power Industry: Presented By: Ma. Donna Rica F. Bayos

Audit of
Power Industry
Presented by:
Ma. Donna Rica F. Bayos
Part 1
Power Industry
 The electric power industry started in the Philip-
pines as a private sector-led industry in 1890 and re-
mained so until the late 1960s
 The government pursued rural electrification through
the cooperative business model starting in 1969
 The monopoly of generation by the National Power
Corporation (NPC) started in 1973
 Re-entry of private sector in the generation sector
through independent owner producers (IPPs) started in
1987
Power Industry
 On August 14, 1969, Republic Act 6038 created the Na-
tional Electrification Administration (NEA) and laid
the groundwork for accelerated electrification in the
countryside.
 In 1972, then President Ferdinand Marcos imposed
Martial Law and shortly thereafter, the Marcos admin-
istration seized the assets of Meralco.
 After almost one and a half decades of govern-
ment dominance in the electric power industry, in 1986,
the administration of then president Corazon Aquino
reverted Meralco to private ownership.
Power Industry
 In 1987, Aquino issued Executive Order (EO) 215 reversing the policy of granting generation
monopoly to NPC and entertained proposals from independent power producers (IPPs) for
build-operate-transfer (BOT) and build-own-operate (BOO) arrangements for new generating
capacity.
 The first BOT contract for a power plant was then signed in 1989 by the NPC and Hopewell
Energy Management, Ltd. The first BOT contract for a power plant was then signed in 1989
by the NPC and Hopewell Energy Management, Ltd.
 To facilitate the privatization process, the EPIRA provided for the creation of the Power Sector
Assets and Liabilities Management Corporation (PSALM) to take over all existing generation as-
sets and liabilities of the NPC.
Power Industry
 Executive Order No. 215 series of 1987 al-
lows private sector to generate electricity
 As of June 2015, the privatization level of
NPC generating facilities has reached 89.7%.
 Another entity established by the EPIRA is
the Energy Regulatory Commission
(ERC).
 Contrary to PD 40, power generation under the EPIRA was not considered a public utility operation,
as stated in Section 6 of RA 9136 otherwise known as EPIRA Act of 2001.
Phases of Power Industry’s Supply Chain
Power Generation Power Transmission Power Distribution

Electricity in the Philippines is pro- The National Grid Corporation of the The circulation of electricity to
duced from various sources such as Philippines (NGCP) is the transmis- end-users is a controlled common
coal, oil, natural gas, biomass, hy- sion system operator for three grids con- carrier business requiring a na-
droelectric, solar, wind, and geo- stituting the Philippine grid and as a tional franchise.
thermal sources. franchise holder, it is in charge of operat-
ing, maintaining, and developing the
country's state-owned power grid.
Philippines has higher electricity costs due to:
1. Lack of Subsidies; and
Functions of NGCP: 2. High Intrinsic Cost of Supply and Transmission due to:
01. Operations and Maintenance a) Dependence on expensive imported fossil fuel for generating
electricity and no tax or tariff relief given for fuel imports used
02. System Operations for power generation;
03. Planning and Engineering b) Relatively low generating capacity of the Philippines. The current
supply of electricity is forecasted to be overtaken by the de-
mand of the country;
c) Relatively small and fragmented grid size result into transmis-
Power Distribution Entities: sion losses, no economies of scale, and inefficient opera-
a. Electric Cooperatives (“ECs”) tions; and
b. Private Distribution Utilities (“PDUs”) d) As an archipelago, there are geographic challenges of transmis-
c. Municipality Unit (“MUs") sion. The Philippines relies on submarine cables to interconnect
the islands.
Key Players
 National Power Corporation (NPC) is the most dominant player in the industry. It dominates the generation and
transmission sectors and comprises the upstream segment of the industry. NPC sources approximately half
of its electricity requirements from its own generation plants and purchases the other half from IPPs.
 Manila Electric Company (MERALCO) is the most dominant distribution utility in the country. MERALCO
has a franchise area that covers 9,337 square kilometers serving 22 cities and 89 municipalities, and sold 22.7 bil-
lion kilowatt hours of electricity in 2001. Over 19 million people reside within MERALCO’s service and
territory which accounts for approximately 48% of the country’s gross domestic product (GDP).
 Visayan Electric Company (VECO) serves Cebu City and its adjacent towns and cities.
 Davao Light and Power Co., Inc. serves Davao City and its adjacent towns covering 3,561 square kilome-
ters serves Cagayan de Oro City and its surrounding towns covering 720 square kilometers.
 Dagupan Electric Corporation serves Dagupan City and its surrounding towns.
Audit Considera-
tions
Audit of
Mining Industry
Presented by:
Ma. Donna Rica F. Bayos
Part 2
Mining Industry
 Mining and mineral processing are activities for extrac-
tion and processing minerals for commercial use.
 The mining sector is likely to contribute to the de-
velopment of the economy of any country through
taxes from large-scale mining companies and con-
tribute to social– economic infrastructural devel-
opment within the area where the mine is located.
Statistics
01. The latest disclosure (2018 EITI Report)
shows the mining sector contributes the
most in the sector with 0.89% to GDP
and 5.99% to total exports.
The Philippines is a leading

02. producer of mineral commodities
such as nickel, gold and copper.
Mining Industry
Bureau of Internal Revenue

Mines and Geosciences Bureau of the Department of En-
vironment and Natural Resources
Department of Energy
Key Players
• Philippine Mining Development Corporation

• Apex Mining Co., Inc.
• MINEX CRYSTALS
• East Mindanao Mining Company
• Nickel Asia Corporation (NAC)
• Benguet Corporation
• JDVC Resource Corporation
• Lepanto Consolidated Mining Company
• United Paragon Mining Corporation (“UPMC”)
Audit Considera-
tions

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Audit of

Power Generation Power Transmission Power Distribution

The Philippines is a leading

Bureau of Internal Revenue

• Philippine Mining Development Corporation

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