MANILA, Philippines (Update 1) - President Gloria Macapagal Arroyo has approved the National Disaster Coordinating Council's (NDCC) recommendation to place Mindanao under a state of calamity to address the power crisis in the island due to the ongoing dry spell, a Cabinet member confirmed Thursday.

Defense Secretary Norberto Gonzales, concurrent NDCC chairman, said Mrs. Arroyo approved the recommendation Thursday.

In an interview, Mindanao Development Authority chairman Jesus Dureza said government officials will meet with the business council of Mindanao and energy producers from the private sector to address the severe power shortage on the island.

Dureza said the the El Niño phenomenon has disabled the region's hydro-electric power plants, causing 5- to 8-hour blackouts. Highly dependent on hydro power, Mindanao has been experiencing power shortfalls and rotating blackouts since 2009 when the ongoing dry spell caused water levels in resevoirs to go below normal levels.

"It's critical not just for elections but for business in Mindanao. We now have daily rotating brownouts lasting 5 to 8 hours and we are still at the onset of El Niño so we only expect rains in July," he told ANC.

Dureza said hydro-electric power plants in Mindanao are only producing a tenth of the usual 1,000 MW power generating capacity.  A March 10 power systems update by the National Grid Corporation of the Philippines (NGCP) said Mindanao has a shortage of 748 megawatts (MW), compared to a  slim 159-MW power shortage a month ago.

Dureza said that under the EPIRA Law, the government cannot go into the business of power generation but will have to rely on the private sector for its energy needs.

To solve the power crisis, he said some businessmen have proposed to lease mountable generators from China, which can be used until July.

He said, however, that leasing the generators would drive up electricity prices even as the additional power is passed on to the entire grid. "We have to adjust to the reality of having power but paying a higher cost," he said.

He added that he will leave it to policy-makers to decide if the government should subsidize the expected increase in electricity prices.

Dureza said he will also ask Mindanao businesses to implement measures to mitigate the expected energy shortfall.

"Some plants can be convinced to shut down operations during peak hours, disconnect from the grid and use their own standby generators. They can reconnect when it's already nighttime when people aren't using as much power," he said.

Dureza said calamity funds to be released to the LGUs will have to be used to mitigate the effects of the El Niño phenomenon, not just the power crisis.

Deputy presidential spokesperson Ricardo Saludo earlier said a declaration of state of calamity would allow local government units in the southern island to tap much-needed calamity funds and impose price controls on basic products in affected areas.

"For national funds that will flowdown to the LGUS, meaning calamity funds that will come from the national to address this crisis, that can be clearly monitored by the national government. As far as the LGUs are conerned, they have their own mechanisms of control," Dureza said. With a report from Willard Cheng, ABS-CBN News