Name: Romar N.

De Luna
Course&Section: BSME-3C
Problem and Background
The power sector is the engine of the global economy, supplying electricity to all other
sectors. In times of crisis, such as the pandemic we have been experiencing in 2020, COVID-19
pandemic may have negatively impacted the energy sector. Both demand in electricity and
petroleum have dropped significantly as economic activity came to a rest since the COVID-19
lockdown started. The lockdown also stops the private and public transport, effectively reducing
fuel demand and resulting in the closure of some retail stations. Data from the Department of
Energy (DOE) showed oil demand decreased by 22.9 percent from 14 million liters in the first
half of 2019 to 10.8 billion liters in the same period in 2020. Moreover, at least 10 percent of fuel
retailers, particularly in areas that are not on main roads, have closed down. With fluctuating oil
prices coupled with the drop in demand and weak refining margins, the country’s only two
refiners the Pilipinas Shell Petroleum Corp. and Petron Corp. decided to close down their
refineries and import fuel instead. Shell’s Tabangao refinery, which was put up in 1960, has been
shut down since May 24 and was permanently closed down in August to help insulate the firm
from further deterioration of refining margins, and aid in its cash preservation efforts.

Discussion
Over the past few months, lockdown measures have significantly reduced electricity
demand in the commercial and industrial sectors. The International Energy Agency (IEA)
estimates that global electricity demand decreased by 2.5 percent in Q1 2020, and forecasts a 5
percent contraction by the end of the year. Increasing unemployment due to the pandemic may
prevent many people from paying their electricity bills. The payment delays and delinquency of
utility bills by end-consumers (residential, commercial, and industrial) is beginning to have a
detrimental effect along the energy supply chain. In many countries, governments have
intervened by maintaining electricity services to the population during the lockdown while also
reducing the negative financial impact on the sector. Lower power demand and end-consumer
payment stresses are constraining the ability of distribution companies to pay power producers
under long-term, take-or-pay power purchase agreements (PPAs). Many power distribution
companies are in need of significant and immediate liquidity support. This is a major concern for
investors who rely on PPAs to recover their investments and make a return. In more liberalized
markets, the drop-in demand has resulted in the collapse of electricity market prices, hurting
power generation companies.
Recommendation and Conclusion
The Power Sector needs to build more plant to prevent the shortage in electricity or
maybe upgrade the all-power source that can produce more than 1000MW to support the
country.
 Solving pandemic crisis first, so if our country got vaccinated for Covid-19 virus, the
transportation will be open. The companies will start to operate, and the people can start working
again. The Country can go back to normal and return for growing the economy.