Philippines faces another power crisis
Monday, September 13, 2004
Philippines faces another power crisis, says ADB expertPosted: 1:45 AM Sept. 11, 2004 Abigail L. Ho Inquirer News Service
SYDNEY, Australia -- Because of the delay in implementing the Electric Power Industry Reform Act (EPIRA), the Philippines may soon face yet another power crisis soon, an official of the Asian Development Bank said.
In a presentation at the 19th World Energy Council Congress and Exhibition here, ADB Southeast Asia Regional Department principal energy specialist Mukhtar Ahmed used the Philippines as one of his examples to show how much a failure in power sector reform would cost a government.
"As a result of the delays in implementing the reform program, private investment in the Philippines' power sector has not been forthcoming, and the country could face yet another power crisis over the medium term," Ahmed said.
The Philippines, which suffered a debilitating power crisis in the early 1990s, should have been one of the first countries in the region to reform its power sector, but "a longer-term view of the power sector was not taken and underlying weaknesses were not adequately addressed," he said.
As a result, government power generator National Power Corp. (Napocor) is in a "poor state of health," Ahmed said. With some $20 million in liabilities, Napocor is one of the national government's biggest financial headaches. According to ADB computations, Napocor's deficit reached $1.6 billion last year, equivalent to 1.9 percent of the country's gross domestic product in 2003, and could mount to $2.4 billion this year, roughly 2.4 percent of the GDP.
Ahmed said these problems were brought on by slow implementation of laws meant to restructure the power industry. Instead of working fast to prevent Napocor from further bleeding, "government-initiated reforms have stalled in the areas of sector restructuring (unbundling, privatization, establishment of a competitive electricity market), sector regulation, tariff rationalization and governance," he said.
The Court of Appeals recently rejected approval by the Energy Regulatory Commission (ERC) of an "unbundling" -- breaking down of rates into components -- of power distributor Manila Electric Co. (Meralco). The case is on appeal by both the ERC and Meralco. The privatization of Napocor generation assets is also encountering delays, according to the privatization schedule that the Power Sector Assets and Liabilities Management Corp. (PSALM), which is handling the privatization, submitted to a Joint Congressional Power Commission late last year.
Bidding for the 600-megawatt Masinloc coal-fired power plant in Zambales province, the first big sale by PSALM if an Oct. 27 auction succeeds, faces failure, with several foreign investors complaining about the bidding terms.
The PSALM has so far sold only three plants, all small hydroelectric power plants, with a combined generating capacity of less than seven megawatts. Establishment of a wholesale electricity spot market has likewise been delayed. The ERC recently approved new Napocor rates that will hike nationwide electricity prices by an average of P0.97 per kilowatt-hour starting Sept. 26. The decision is under fire from consumers and lawmakers.
posted by philpower @ 11:29 AM,
