HIS EXCELLENCY FERDINAND R. MARCOS, JR. — President of the Republic of the Philippines, Malacañang Palace, Manila
Hon. Frederick D. Go — Secretary of Finance & Special Assistant, Investment and Economic Affairs
Hon. Sharon S. Garin — Secretary, Department of Energy, Energy Center, BGC, Taguig City Hon. Atty. Francis Saturnino C. Juan — Chairperson & CEO, ERC, Ortigas Center, Pasig City Hon. Arsenio M. Balisacan — Secretary, (DEPDev), Ortigas Center, Mandaluyong City
Hon. Jerico Jonas B. Nograles — President, National Power Corporation, Diliman, Quezon City
Hon. Dennis Edward A. Dela Serna — President & CEO, PSALM, Quezon City
Hon. Sen. Erwin T. Tulfo — Chair, Senate Committee on Energy, Senate of the Phlis., Pasay City Hon. Cong. Franz Josef “Peto” E. Alvarez — Chair, House Committee on Energy, Quezon City Cc: Mindanao Congressmen Bloc
RE: Urgent Appeal to Revoke the Original Proponent Status (OPS) Granted to San Miguel Global Power (SMGP) for the Agus-Pulangi Hydro Plant Complex (APHPC)
Rehabilitate-Operate-Maintain-Plus Project.
Your Excellency, Honorable Secretaries, and esteemed Officials:
We write on a single, shared premise: the Philippines’ energy future must be affordable, clean, indigenous, and transparent — or it will fail the people it is meant to serve.
- Affordable energy to draw manufacturing, energy-intensive industry, SMEs, and infrastructure investment, and to head off the unemployment and poverty that high power costs help drive.
- Clean energy to cut the carbon emissions behind the intensifying El Niño events already costing the Philippines and the world billions in flood, wildfire, and crop-loss damage.
- Indigenous, renewable energy to free the nation from imported-fuel volatility and a global political climate beyond any single country’s control.
- Transparent government to root out the corruption that has driven Philippine electricity costs to one-half to one-third above our ASEAN neighbors.
Respectfully submitted,
Northern Mindanao Bloc Central Mindanao Bloc Southern Mindanao Bloc
Visayas Supporting Mindanao Bloc Lanao Bloc & APHPC Managers
(We represent a unified alliance of Mindanao and Visayas stakeholders—from LGUs, industry leaders, and USTP-PhD scientists, Agus Hydro Plant Managers to local energy consumers and climate advocates, strongly endorsing the landmark Mindanao Energy Storage Project since its crusades in 2024. As stewards of the region’s sustainable future, we reaffirm both our strategic backing and our intent to directly invest in this transformational renewable hydro project).
I. Executive Summary
Led by a four-time Presidential Awardee and former National Power Corporation (NPC) Vice President, our team has engineered the Mindanao Energy Storage Project (MESP)—a breakthrough, indigenous clean energy solution. Developed alongside PhD-credentialed scientists from the University of Science and Technology of Southern Philippines (USTP), veteran NPC hydro plant managers, and licensed professional engineers, MESP integrates three core technologies: HED, CEHP, and SOPS founded on the process of “Energy Trading” and “Energy Storage”, which IPO-Phils and Europe-based Espacent published the patent on HED (Hybrid Economic Dispatch), Bibliographic data: PH12013000217 (A1)-2015-01-21, Classification: International – EO285/00 EO289/04 HO2510/00.
Originally launched as the Energy Storage Project (ESP), MESP gained its regional mandate after winning unanimous support across four major 2024 industrial and policy summits: the Mindanao Power Summit (May 31), the Mindanao Development Authority (Sept. 4), the Mindanao Clean Energy Forum (Sept. 12), and the Mindanao Business Conference (Sept. 13).
MESP directly confronts three catastrophic trends in the Philippine power sector:
- Economic Stagnation & Energy Poverty: Post-EPIRA industrial electricity costs surged 185%—over four times the ASEAN average of 44%. Consequently, the Philippines suffered the region’s lowest generation per capacity, directly driving ASEAN’s highest levels of energy poverty and unemployment.
- Unjust Post-Privatization Rate Hikes: Rates were aggressively increased on indigenous RE geothermal and hydro plants immediately after privatization, despite these assets being naturally insulated from global fuel import volatility.
- Environmental Degradation & Wasted Clean Energy: Unchecked coal expansion forced the systematic bypassing of clean power. Between 2015 and 2022, Mindanao wasted 61 billion kWh of carbon-free hydro energy—unnecessarily inflating carbon emissions, violating statutory RE priority dispatch, and reneging on the country’s 2015 Paris Agreement commitments.
MESP Delivers Unmatched Grid Economics Beyond Base-Load Hydro
Beyond supplying low-cost, water-borne baseload hydropower, MESP eliminates reliance on expensive peaker plants and costly frequency regulation through two breakthrough capabilities:
- Replacing Diesel Peaking Plants at 1/1,500th the Cost: Driven by Nature’s Powerbank operations under our patented Hybrid Economic Dispatch (HED) technology (IPO-Phils), MESP delivers peaking power at a fraction of traditional diesel peaking plants (₱46/kWh).
- Slashing Frequency Regulation Costs by 2,000x: Utilizing hydro-driven frequency regulation, MESP provides ancillary grid stability at a 2,000x cost advantage over conventional lithium-ion Battery Energy Storage Systems (BESS).
Yet the process meant to bring ESP to life has been severely compromised. On June 3, 2025, PSALM rejected the original proponent’s ₱35.76 billion Unsolicited Proposal (USP) in favor of San Miguel Global Power’s (SMGP) ₱69.72 billion offer—effectively double the cost.
This rejection was not merely a change in preference; it was a clear violation of RA 11966 (the PPP Code). PSALM flawed the process by applying Solicited Proposal criteria to an innovative USP, bypassing the mandatory 90-day clarificatory period (Section 55), delaying official meeting notices by months, ignoring the original partners’ proven track record, and dangerously redefining “Value for
Money” as the largest short-term check for the government rather than the lowest long-term electricity bill for consumers.
To correct the course, we propose a Mass-Based Ownership (MBO) structure. By reserving 30%+ equity in the Service Company for local cooperatives, power consumers, workers, and hydro-plant employees, this model transforms a public asset into shared community wealth. Crucially, it honors EPIRA’s explicit policy to broaden ownership and de-monopolize the energy sector—all while keeping the hydro facilities firmly under government control and ownership.
II. Why the OPS Grant to SMGP Should Not Stand
PSALM has offered six grounds for rejecting the original proponent’s USP. Each ground, examined against the PPP Code itself, does not hold:
| PSALM’s Stated Ground | Why It Fails |
| Ground 1 — “Insufficient Value for Money (VFM)” | RA 11966 Secs. 2 & 3(jj) define VFM as the lowest long-term cost of service to the public — not the largest upfront cash payment to the government. Rewarding SMGP’s ₱69.72B bid over the original proponent’s ₱35.76B bid inverts the law’s purpose: the ₱33.96B gap does not disappear, it is recoverable from ratepayers through higher tariffs for decades. |
| Ground 2 — “Non-Scope Components” (HED, CEHP, SOPS) | An Unsolicited Proposal (USP) exists precisely to introduce innovation beyond a government-drafted scope. Judging a USP against the fixed terms of reference written for a Solicited Proposal — a standard never applied to this project — defeats the very purpose Congress wrote into the PPP Code. Innovations are crucial to face the challenges of the energy crisis and scorching “Super-El Nino” and Climate Change. |
| Ground 3 — “Unclear Project Components” | The confusion is procedural, not technical: PSALM bypassed the mandatory 90-day clarificatory period under RA 11966 Sec. 55 and, by its own record, mailed meeting notices months after the scheduled dates. An agency cannot cite a lack of clarity it created by skipping the clarification process the law requires. The new Technologies were developed for over a decade, not even a single day is labored by PSALM to understand. The meeting on May 12, 2026 was feverishly requested by the Private Proponent – not PSALM. |
| Ground 4 — 7-Year vs. 3-5 Year Rehabilitation Timeline | Timelines set for Solicited Proposals have no legal bearing on a USP. The 7-year schedule reflects an engineering judgment by APHPC personnel with a combined 300+ years of hands-on operating experience at this specific facility — not an arbitrary delay. The 3-5 years conceived by PSALM is more of Terms of Reference under Solicited Proposal mode – not in this USP case, hence, 3-5 years term does not exist. |
| Ground 5 — “Insufficient Operational Experience” | PSALM’s evaluation omitted the original proponent’s partner, POWERCHINA — builder of the 25,000 MW Three Gorges Dam and holder of a 200 GW hydro / 60 GW pumped-storage track record — whose participation is documented in a signed Letter of Interest and Cooperation Agreement with original private proponent, though not yet declared the OPS. |
| Ground 6 — “Unsubstantiated Financial Assumptions” | This finding conflates two distinct, sequential stages of the PPP process. Detailed financial parameters are legally refined during the Negotiation phase, which by design follows — and cannot be judged by the standards of — the Detailed Evaluation phase. |
III. The MESP Solution: Three Technologies, One System
MESP does not ask the government to gamble on unproven concepts. Each component solves a distinct, quantifiable problem in the Agus-Pulangi system, and together they form a single integrated storage-and-dispatch platform. Refer to Video below: Three Technologies – One System.
| Technology | How It Works | Impact / Value |
| Hybrid Economic Dispatch (HED) | Uses Lake Lanao (340 km²) as a grid-scale hydraulic battery — storing daytime solar energy and releasing it to meet the evening peak. | Delivers peaking power at roughly ₱3.00/kWh — versus ₱46/kWh for diesel and the equivalent of ~₱6,200/kWh in lithium-based battery storage (BESS) at over $100/kWh. |
| Circular Energy for Hydro Plants (CEHP) | Recaptures roughly 20% of cascading hydro effluent — water currently discharged to the sea — using solar-powered pumping to reuse it. | Adds 110 MWH of capacity to the Agus Complex without a single new dam or powerhouse — and its environmental footprint. |
| Solar Ocean Pumped Storage (SOPS) | Pairs seawater and coastal topography with solar-powered pumping to deliver storage for nighttime and long-duration demand. | Stabilizes coastal and island grids on 100% renewable energy, cutting archipelagic reliance on costly, subsidized, imported-fuel generation. |
IV. Recommended Courses of Action
We respectfully urge the following actions, in sequence:
- Application of 3 New Innovative Technologies founded on a patent published by IPO-Phil and Espacenet.
- Revoke and annul SMGP’s Original Proponent Status — the procedural irregularities documented above expose consumers to an unnecessary ₱33.96 billion asset markup that need never be recovered through their electric bills.
- Halt the rushed 2027 Swiss Challenge — suspend competitive-challenge preparations on the ₱70 billion contract until every procedural defect under the PPP Code is audited and corrected. Mindanao’s existing excess capacity means there is no operational reason to force this timeline ahead of the 2028 national election.
- Enforce the mandatory PPP Code clarification process — direct PSALM to reopen the 90-day clarificatory window under RA 11966 Sec. 55 to properly evaluate MESP’s technical and financial models and its partners’ credentials.
- Redefine “Value for Money” in writing — issue a joint DOE-DEPDev administrative directive that measures VFM by the lowest end-user generation tariff (₱/kWh), not the largest upfront concession fee to the government.
- Adopt the Mass-Based Ownership model — keep asset ownership with the National Government while reserving 30% ownership of the service company for local cooperatives, power customers, workers, consumers, and hydro-plant employees, converting a public utility into shared public wealth.
Early foreign investor interest in the Mindanao Energy Storage Project (MESP) stalled amid recent political instability and corruption allegations. However, capital remains on the sidelines awaiting evaluation transparency and merit-based awards. To restore momentum, MESP should pivot to a Mass-Based Ownership Model in partnership with major local joint-venture players—aligning directly with EPIRA’s mandate for ownership dispersal and de-monopolization.
Collective stakeholders of Mindanao and the Visayas—including plant engineers, USTP-PhD researchers, local government units, enterprise leaders, and grassroots advocates—unanimously support the Mindanao Energy Storage Project, confirm strong interest in investing in this monumental renewable hydro initiative
Originally supported in 2024 to lower power costs and drive a 100% renewable energy transition, MESP secured Department of Energy endorsement on January 8, 2025, with PPP Center’s “completion” certificate. By deploying three innovative technologies—HED, CEHP, and SOPS — MESP offers a proven, actionable solution to systematically eliminate fossil fuel dependence and secure Mindanao’s energy future.
A Closing Appeal
Every month this OPS grant remains unexamined risks locking Filipino consumers into higher electricity costs for decades.
We respectfully ask Your Excellency and the concerned agencies to uphold RA 11966, reopen the evaluation, and ensure that “Value for Money” means the lowest long-term cost to the Filipino ratepayer—not the highest upfront payment to the government. MESP offers Mindanao an opportunity to pursue affordable, indigenous, renewable energy while expanding Filipino ownership and protecting a vital public asset.
We therefore appeal for a fair, transparent, and technically rigorous review—before irreversible commitments are made. For Mindanao. For the Filipino consumer. For an affordable, clean, and secure energy future for the Philippines. Reference Videos follow:
