Small town in Negros reaps benefits from geothermal plants

By Romy G. Amarado
Visayas Bureau
Last updated 04:45pm (Mla time) 07/22/2007

DUMAGUETE CITY — Valencia is one small town of barely 5,000 households in Negros Oriental that is rolling in money.


For this municipality, 9.4 kilometers west of Dumaguete, the money comes from the royalty it has been receiving from the Philippine National Oil Company (PNOC) that has been mining the town’s rich geothermal energy sources to feed the Palinpinon Geothermal Power Plants I and II, which has a combined capacity of 192.5 megawatts.


According to municipal treasurer Rolando Obaniana, the town (population: 24,365) has about P169 million in surplus funds in the bank.


There should have been more money, but P20 million has been used annually to subsidize the electric consumption of the town’s residents that, in the latest survey, totaled 4,860 households, Obaniana said.


A large part of the royalty was appropriated for several livelihood projects such as farm-to-market roads, planting of fruit trees, water works system and irrigation, Obaniana said.


Vice Mayor Diodoro Olasiman said the town started using its surplus for livelihood and development projects, after the General Appropriations Act (GAA) of 2005 gave the go-signal to localities receiving royalties from PNOC to use their surplus for livelihood undertakings.


Olasiman said the town also got a similar clearance from the Department of Budget and Management in 2005.


Obaniana explained that the municipality consistently acquired huge surplus because the share of the town from the royalty has been much bigger than the amount it used to subsidize the residents’ electric bills.


The municipal government has been giving a P600-monthly subsidy — the average household consumption in the town — to every household with an electrical connection, Olasiman said.


Obaniana said the municipality was spending about P20 million in electric subsidy annually but its share in the royalty was increasing.


Valencia town, he said, got about a P94-million share from the royalty in 2006, and this was expected to increase to P100 million this year because the sale of geothermal energy was also increasing due to the growing demand for electricity.


Republic Act (RA) 7160 or the Local Government Code of 1991, mandates that local governments should get “one percent of the gross sales or receipts of the preceding calendar year” of the “proceeds derived by any government agency of government-owned and controlled corporation engaged in the utilization and development of the national wealth.”


Section 294 of the same law also states that “80 percent of the proceeds, derived from the development and the utilization of hydrothermal, geothermal… shall be applied solely to lower the cost of electricity in the local government unit where such source energy is located.”

Due to this provision, Obaniana said that prior to the GAA of 2005 and the clearance from the DBM, the town failed to use the royalty surplus, which had then accumulated to almost P200 million

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