1 Introduction

Sometime in the latter part of January 2021, the Mini/Micro Hydropower

Development Team started the pre-feasibility study of the Makulapnit Reservoir Mini
Hydro Project (MHP), located in the Municipality of Torrijos, in the island province of
Marinduque. This is in compliance to the verbal instruction of President P. J.
Benavidez, during the meeting held on 20 January 2021 with the managers of the
Design and Development Department.
The Makulapnit Reservoir is almost located at the center of the Island of
Marinduque, approximately 15 kms east of the town proper of Boac. It used to be the
source of fresh water when the Marcopper Mining Corporation was still in operation.

2 Project Description
The location of Makulapnit Mini Hydropower Project (MHP) is shown in Figure 1. The
project will be located approximately within 50 m downstream from the outlet of the
Makulapnit Reservoir, where it will utilize the stored water from the reservoir for
power generation.
The hydropower scheme has a conventional layout. It will exploit a gross head of 70
m by diverting the water from the Makulapnit Reservoir into a steel pipeline and
conveying that water to steel penstock and then to a powerhouse located
approximately 700 m downstream. The installed capacity of the project is 500 kW
and the estimated annual energy generation is about 2.10 GWh. The general layout
of the scheme is shown in Figure 2.
The main structures of the scheme are:
 Concrete overflow weir, 5–m high by 37-m long, with 1.5 m by 1.5 m opening
sluiceway with wheeled vertical gate on its right;
 Gated reinforced concrete side intake with 1 m by 1 m inlet opening
connected to the headrace steel pipe;
 Steel pipe, approximately 700 – m long, with an inside diameter of 700 mm;
 Surge tank, to absorb sudden rises of pressure, as well as to quickly provide
extra water during a brief drop in pressure;
 Steel penstock, approximately 130 – m long, with an inside diameter of 700
mm, bifurcated to provide the needed discharges for the turbine units;
 Surface powerhouse accommodating two (2) units of horizontal shaft Turgo
Turbines and its associated equipment;
 Outdoor switchyard feeding into the 13.8 kV distribution lines; and
 Access road, connecting the concrete overflow weir area to the existing road,
via the powerhouse area.

Makulapnit Mini Hydro Project | 1 of 9

Table 1 shows the technical features of the project.

3 Hydrology
Rainfall
There are four recognized climate types i.e., I, II, III and IV in the country, and these
are based on the distribution of rainfall. Marinduque belongs to type III, having no
very pronounced maximum rain period with a dry season lasting only from one (1) to
three (3) months, either during the period from December to February or from March
to May.
Rainfall stations with available daily data are installed in many parts of the island and
being managed by the Advanced Science and Technology Institute (ASTI) under the
Department of Science and Technology (DOST). DOST-ASTI’s Philsensors website
can be easily accessed to secure daily rainfall data. Another rainfall station with
available monthly data is found. This station is located in Boac and the data can be
accessed thru the website of World Weather Information Service (WWIS) under the
World Meteorological Organization.
The rainfall data from WWIS was adopted in the estimate of inflows, since it has a
longer and complete monthly rainfall data, 2009 to 2020. Data secured from some of
the rainfall stations in Philsensors website were used for validation/checking.
Shown on Table 2 are the monthly rainfall data gathered from WWIS website. Figure
3 shows the average monthly rainfall data, which vary between 56 mm to 209 mm.
The recorded highest monthly rainfall was 440 mm and it was in the month of
December in 2010.
Estimated Inflows at the Proposed Dam Site
The monthly inflows at the proposed dam site were estimated using the formula
below:
Imo = Rmo x DAsite / (86.4 x Dmo)
Where:
Imo = Monthly inflow for a particular month, cms
Rmo = Monthly rainfall depth for a particular month, mm
DAsite = Drainage area at the proposed dam site, km2
Dmo = Number of days for that month
The flow duration curve of the estimated monthly inflows is shown in Figure 4.
Design Flood
The design flood (Peak Discharge) adopted has a return period of 100 years. This
was based from the previous studies conducted in 2017 for small hydro projects in

Makulapnit Mini Hydro Project | 2 of 9

the SPUG Areas. For the diversion works during the construction, the design flood
that will be adopted has a return period of 10 years.
Several methods are available i.e., Regional Frequency Analysis, Unit Hydrograph
Method, Specific Discharge Method, etc. in estimating the design floods. We used
the Specific Discharge Method since it is much easier and the data that we need in
the calculation is already available, the drainage area.
Peak discharges at various return periods were estimated by computing first the
specific discharge using the Creager”s equation shown below:
(DA-0.048-1)

q = C x DA
Where:
q = Specific Discharge (m3/sec/km2)
C = Creager”s Constant, as tabulated below
DA = Drainage Area (km2)
Creager’s Constants
Region RETURN PERIOD
2-Year 5-Year 10-Year 25-Year 50-Year 100-Year
Luzon 15.66 17.48 18.91 21.51 23.83 25.37
Visayas 6.12 7.77 9.36 11.89 14.52 17.47
Mindanao 8.02 9.15 10.06 11.60 12.80 14.00
Peak discharges in m3/sec at various return periods were computed by multiplying
the specific discharge by the drainage area. Tabulated below is the result of the
computation:

RETURN PERIOD
2-Year 5-Year 10-Year 25-Year 50-Year 100-Year
Specific 11.88 13.26 14.35 16.32 18.08 19.25
Discharge,
m3/sec/km2
Peak Discharge, 140.54 156.87 169.70 193.03 213.85 227.67
m3/sec
Figure 5 shows the peak discharges at various return periods.

Makulapnit Mini Hydro Project | 3 of 9

4 Cost Estimates
The total project cost is PHP 110.80 million. This was derived using the quantities of
the works estimated from the preliminary designs of the overflow weir, headrace
steel pipeline, surge tank, steel penstock, surface powerhouse and electro-
mechanical requirements, outdoor switchyard feeding into the 13.8 kV distribution
line and access road. Unit costs employed were based from unit costs used in the
Feasibility Study on Hydropower Development in SPUG/Missionary Areas in 2017.
These unit costs were updated to current price level using the inflation rates as
published by the Philippine Statistics Authority (PSA), on their website.
The investment components include civil works, electro-mechanical works, physical
and price contingencies, engineering and non-engineering costs. Table 3 shows the
summary of the total project cost.

5 Power Supply and Demand

The Boac and Torrijos Diesel Power Plants (DPPs), together with Power Barge 120
stationed at Balanacan, Mogpog, provide the needed power in the Marinduque
Island. These power plants have a total rated capacity of 26,622 kW and operate 24
hours. Both Boac and Torrijos DPPs have rental units, to augment their existing
units, with rated capacities of 4000 and 1500 kW, respectively.
Boac DPP has the largest rated capacity, 12,872 kW, excluding the rental, primarily
because the load center in the island is in Boac. The 3 x 1224 kW units are
scheduled to be retired this year, 2021. These units were in operation since 1997.
The three power plants have generated about 56.67 GWh in 2018, 61.69 GWh in
2019 and 63.44 GWh in 2020. It has an average increase of 6% for the last two
years, having 9% in 2019 and 3% in 2020.
Shown on Tables 4 and 5 are the available capacity and the actual energy
generations and peak demands (actual and forecasted) in the island, respectively.

6 Economic Analysis
An essential element in evaluating the economic benefit of a project is the definition
of the alternative to the project, the “without project” scenario. The “without project”
scenario would be that no hydropower project. This means that the existing units of
Diesel Power Plant in Boac will continue to operate until its retirement.
For the case of “with project” scenario, our proposed mini hydro project will be
implemented. The total cost for construction and operation & maintenance of our
proposed mini hydro project should be proven lesser than the total cost for the
operation & maintenance (less salary and wages), fuel consumption and
replacement of the equivalent capacity of the Boac DPP.

Makulapnit Mini Hydro Project | 4 of 9

Proposed Mini Hydro Project
The economic cost was derived from the total project cost as presented in Table 3.
The total project cost was netted of all taxes and duties and price contingency, then
segregated into tradable and non-tradable components and then multiplied by
appropriate conversion factors. Presented below is the derivation of the economic
cost.
Financial Cost Conversion Economic Cost
mil PHP Factor mil PHP
Traded Goods

Foreign Exchange Component 39.02 1.2 46.82

Non-Traded Goods

Local Component

Unskilled Labor 11.84 0.6 7.10

Others 47.35 1.0 47.35

Taxes & Price Contingency 12.59

TOTAL 110.80 101.27

The annual operation & maintenance cost is estimated at PHP 3.64 million. This
includes the salary and wages for the three (3) operators, three (3) security guards
and one (1) janitor. Converted to economic values by deducting all the taxes, the
annual economic O&M amounts to PHP 3.38 million.
Replacement cost of PHP 15.75 mil for the electro-mechanical equipment with an
economic life of 12 years have been included in the economic analysis. The total
economic replacement value amounts to PHP 18.90 million.
Thermal Alternative
Normally, the economic benefit shall be the cost of installing and operating the
thermal alternative, happens to be the diesel power plant in our case. Since there is
enough capacity in the area, the economic benefit will be derived mostly from the
costs of operating and maintaining the Boac DPP. Economic benefit from installing a
new diesel power plant, with equivalent capacity, is scheduled on the latter part of
the economic life of our mini hydro project, where some of the existing units of the
Boac DPP are scheduled to be retired.
The difference of the net flow of the DPP and our Mini Hydro Project is the cost
savings and this will be the net benefit of our proposed project.
The DPP shall have an equivalent capacity of our MHP. Based on the on-going
project of NPC, the project cost of a DPP per kW is around PHP 77,020.00. The
economic value is PHP 67,777.60 per kW.

Makulapnit Mini Hydro Project | 5 of 9

The operating cost of the plant was based in the existing diesel power plant in Boac.
The recurrent cost for the plant production for existing diesel power plant is
presented below. This is converted to economic values based on the domestic price
numeraire and assuming that 12% of the operating costs are taxes.

Operating Cost Actual Amount, Economic Values,

PHP/kWh PHP/kWh
O&M Cost 1.43 1.32
Fuel Cost 8.08 7.47
Total 9.51 8.79

Cost-Benefit Analysis
The cost and benefit streams have been estimated for a 25-year period. The residual
value after 25 years was assumed to be zero. All costs used for the analysis are in
2021 values.
The result of the analysis shows that the proposed project is economically viable,
having an estimated economic Internal Rate of Return (IRR) of 13.33% which is
above the 10% hurdle rate as prescribed by the National Economic and
Development Authority (NEDA), economic Net Present Value (NPV) of PHP 24.22
million and a Benefit-Cost (B-C) ratio of 1.21.
Table 6 shows the cost and benefit streams.
Sensitivity Analysis
Economic sensitivity analysis was conducted using the NEDA-ICC prescribed
sensitivity runs i.e., 10% decrease in benefits, 10% increase in costs and 10%
decrease in benefits and 10% increase in costs. Result of the sensitivity runs is
presented below:
Cases NPV, mil PHP IRR, % B-C Ratio
Base case 24.22 13.33 1.21
10% decrease in 10.35 11.46 1.09
Benefits
10% increase in 15.55 11.98 1.12
Costs
10% decrease in 1.69 10.22 1.01
Benefits and 10%
increase in Costs

Makulapnit Mini Hydro Project | 6 of 9

The sensitivity analysis shows that the proposed project will still be viable even there
will be a combined 10% decrease in benefits as well as 10% increase in costs.

7 Financial Analysis
This section presents the results of the financial analysis undertaken to determine
the financial viability of our proposed project. In particular, the following aspects have
been taken into consideration:
 Cost associated with the proposed development program which includes the
development costs and the operating costs;
 A 25-year project period;
 Price term is in current 2021 level; and
 Construction period of two years.
Project Investment Cost
The project investment cost components are the direct (construction costs) and
indirect costs (project engineering services, land acquisition and contingencies).
These amounts, as mentioned above, are expressed in 2021 price level.
Tabulated below is the summary of the investment cost while the detailed breakdown
of the cost estimates is presented in Table 3.
Description Amount, PHP
Direct Cost 93,499,700.00
Indirect Cost 17,297,444.00
Total Project Cost 110,797,144.00

A replacement cost of PHP 15.75 million for the electro-mechanical equipment with
an economic life of 12 years have been included in the financial analysis.
Operating Expenses
The bases of operating expenses for the project are the following:
 An annual operation & maintenance cost amounting to PHP 3.64 million. This
includes the salary and wages for the three (3) operators, three (3) security
guards and one (1) janitor. An amount of PHP 2 million is also included for the
annual maintenance and other operating expenses;
 A local tax of 1% of gross sales as per EPIRA, Rule 29 of the IRR;
 Financial Benefits to Host Communities as per ER 1-94, amounting to PHP
0.01 per kWh of the electricity sales;

Makulapnit Mini Hydro Project | 7 of 9

  Government share as per RA No. 9513, Renewable Energy Act of 2008,
amounting to 1% of the gross revenue;
 Real estate tax assumed at PHP 0.20 million per annum; and
 An income tax at the rate of 10% of its profit, with profit tax exemption for the
first seven years of operation, as per RA 9513.
Weighted Average Cost of Capital (WACC)
The WACC is a benchmark indicator used to evaluate the profitability of our
investment. The financial IRR should be at least as high as the WACC in order for
our project to be considered feasible. For our project, the WACC is computed at
8.8%, using the following assumptions:
 A debt to equity ratio of 70:30 on total project cost;
 A nominal return on equity of 15%; and
 A real cost of debt interest rate of 6.2%.
The basis of the 15% cost of equity includes the following assumptions:
 Philippine Debt Papers at 6.6%;
 Average cost of borrowing at 5.4%; and
 Inflation rate at 3%.
True Cost Generation Rate (TCGR)
The costs considered to determine the TCGR are the fuel cost, O&M Cost and the
investment cost. The TCGR was computed at PHP 11.35 per kWh by adding the
following:
 A production cost of PHP 8.08 per kWh, based on delivered cost of fuel at
PHP 27.55 per liter and consumption rate of 0.29 liter/kWh at Boac DPP;
 An O&M cost of PHP 1.43 per kWh, based on the production cost of Boac
DPP in 2020; and
 An annualized cost of the total project cost in the amount of PHP 1.84 per
kWh, using the WACC as the interest rate and 25 years as the period.
Derived Generation Rate and Revenue
The gross annual energy generation is estimated at 2.10 GWh, with a system loss
assumed to be at 4%, the net annual energy generation is estimated at 2.02 GWh.
The gross revenue is calculated based on energy sold.
The generation rate is derived to achieve values of the financial indicators above the
comparative benchmarks i.e., financial IRR is higher than the WACC, NPV is higher
than 0 and B-C ratio is higher than 1. The minimum derived generation rate that
satisfied the above comparative benchmarks is PHP 8.36 per kWh. It is higher than
Makulapnit Mini Hydro Project | 8 of 9
the existing Subsidized-Approved Generation Rate (SAGR) of PHP 5.6404 per kWh
in Marinduque but lower than the TCGR of PHP 11.35 per kWh.
Adopting the TCGR in the financial analysis, the result will show that our proposed
project is financially viable, having a financial IRR of 14.4% which is above the
WACC, NPV of PHP 47.24 million and a B-C ratio of 1.33.
Table 7 shows the cost and benefit streams for the financial analysis.

8 Conclusion and Recommendations

Based on the results of the pre-feasibility study our proposed project is technically
and economically feasible. It can also be financially feasible if we will adopt the
TCGR as our selling rate. Hence, we are recommending it for the next stage of
development, the feasibility study.
The following field investigation works are recommended to be prioritized and
conducted, to further increase our confidence in the results of our study:
 Topographic survey of the whole project area, to confirm the various
elevations and lengths adopted; and
 Additional discharge measurements at the outlet of the Makulapnit Reservoir,
to come up with more actual river discharge data at the site.
Our proposed project, though it is only small or we call it mini hydro, will utilize our
natural resources, which is renewable that does not harm the environment. This can
help our world, in our little way, to reduce the greenhouse gas emission coming from
our power plants.

Makulapnit Mini Hydro Project | 9 of 9