Disincentive to prospective investors
Thursday, February 23, 2006
Inquirer Editor's Note: Published on Page A12 of the February 23, 2006 issue of the Philippine Daily Inquirer
IT ALARMS us to hear so-called investment consultants badgering the government to stampede into a fire sale of the generation assets of National Power Corp. (Napocor). The badgering diverts public attention from what ails the power industry.
The government’s failure to remove Manila Electric Co.'s (Meralco’s) stranglehold on the electricity market -- 70 percent in Luzon, 60 percent nationwide -- is the disincentive to prospective buyers of Napocor power plants. Where will the more efficient producers sell their power in a market where the monopoly distributor (Meralco) is willing to pay a higher generation rate to a sister company (First Generation), despite the availability of cheap and excess power from Napocor?
If we are to fix the power industry, this is where we should start: make sure that the efficient plants are dispatched first, and the captive customers pay only for the cheapest supply available in the market.
Confusion in the industry is not helped at all by an ill-disguised power-grab by the proponents and sponsors of Executive Order No. 474, which creates a Philippine Strategic, Oil, Gas, Energy Resources and Power Infrastructure Office (Psogerpio), supposedly to address a looming power crisis and to attract investors in a Napocor fire sale.
Before we think of reinventing the wheel and creating new offices with kilometric names (but with vague and short-sighted mandates), let us make sure that the present consumer safeguards work. We need a third wheel in power like we need to pay for electricity we did not even consume.
Incidentally, the market reception of the First Gen Corp. IPO, which fell far short of its twice-scaled-down valuation, was reportedly cold because of the delayed privatization of Napocor assets. If true, then there is indeed poetic justice.
Finally, before the government puts those power plants on the auction block, it should first determine the equity of consumers in those assets, as a consequence of the Purchased Power Adjustment (PPA) charges. (Remember, the obnoxious PPA charges have cost captive electricity consumers an arm and a leg.) For all we know, consumers may already own those assets in the light of Napocor’s mere 5-percent equity. And under open access or an open market, we could supply ourselves with our own cheap power.
PETE L. ILAGAN, president, National Association of Electricity Consumers for Reforms, 10 Bayside Court Compound, 680 Quirino Ave., Tambo, Parañaque City
posted by philpower @ 11:19 AM,
