Pricing must reflect true cost of electricity
Monday, September 13, 2004
The Department of Energy (DoE) has been advised by former Energy secretary Francisco L. Viray to go beyond explaining to the public why there is such a need to reflect true cost of electricity; and set this as a determined policy to lure new investments in the power sector; thus, ensuring that the country would not suffer another round of power crisis.
In response, Energy Secretary Vincent S. Perez has accepted the challenge and vowed that his department would take the cudgels of explaining to the public the mechanics and rationale for the average P1.87 per kilowatt hour (kwh) rate adjustment being sought by state-owned National Power Corporation.
The current energy chief stressed that through the "Power Patrol" program, they will likely embark on a nationwide consultation and/or roadshow again so they can explain the issue up to the community or household levels.
In his paper, "Prescriptions for the Ailing Power Industry," Viray emphasized that what threatens the sector right now is not only on the issue of supply; but also on the concerns of politicized power rates and the government’s huge debt burden.
"Compounding the possible power supply shortages is the politicized power rates and its contribution to the debt problem. Everybody knows that selling electricity at artificially low rates means Napocor is incurring losses every second its plants are running," he said.
It would be noted that the state-owned power firm incurred whopping losses of P113.23 billion last year; and the hemorrhage is seen to continue until 2007; without implementing necessary measures to salvage its financial position.
In reflecting true cost of electricity, Viray noted that it would equally be important for government to also explain the mechanics of the removal in cross subsidies; as this is seen to create some initial staunch opposition from some advocacy groups.
"On the other side of the coin, removing subsidies will definitely increase rates resulting in protests but only because the public has been misinformed," he said. The former energy secretary, who was instrumental in solving the power crisis of the early 90s, was invited by Perez to lay down some suggestions on how well the DOE can address the concerns now plaguing the industry.
In this vein, Viray noted that aside from addressing supply and power rate concerns, the government shall also gain enough grit and resolve to implement the provisions of the Electric Power Industry Reform Act (EPIRA) and hasten the privatization of debt-ridden and financially-strained NPC.
He further noted that taking a look at the current forecasts made by the energy department, the actual supply and demand of power will meet between 2008 to 2009 in the major grids of the country; and that would just only be 4 to 5 years from now.
"Sadly, the immediate future is not bright for Luzon, Visayas and Mindanao in terms of their power supply situation. Unlike the power crisis in 1993 where only Luzon was affected, the next round of shortages will definitely affect the entire country," he has emphasized.
He related that in the early 90s, estimated losses then reached P30 billion as businesses closed down.
The companies that survived had to trim down their work force, making many Filipinos jobless, as electricity was virtually being rationed, Viray added. (MMV)
posted by philpower @ 4:38 PM,
