Government must foot the bill — ECOP

The government must shoulder the stranded costs the National Power Corp. (Napocor) has accumulated through the years and is trying to pass on to consumers under the new Electric Power Industry Reform Act (EPIRA).

This strong position against making the consuming public shoulder the huge indebtedness of the state firm after entering into contracts to buy expensive electricity from independent power producers (IPP) was aired by Donald Dee, president of the Employers Confederation of the Philippines (ECOP).

ECOP counts among its members some of the biggest industrial and manufacturing companies that are heavy users of electricity.

"Penalizing the public with higher costs of power defeats the very purpose of the law, that of bringing down electric rates to levels competitive to those in neighboring nations," Dee told the Philexport News and Features.

The new law which is due for actual implementation when the President signs its implementing rules and regulations, specifically mandates that a universal cut of 30 centavos per kilowatt hour will be immediately adopted across the country.

But those who drafted its implementing rules and regulations projected that if Napocor’s huge debts are passed on to consumers, instead of a power rate cut, there will be rate increases ranging from 30 to 50 centavos per kilowatt-hour.

Breaking down of Napocor into several competing generating companies plus one National Transmission Corp., was likewise intended to create competition in the power industry that must bring down costs to corner supply deals, Dee pointed out.

The reform law was part of an overall policy reform program to bring down the cost of doing business in the Philippines for its industries to compete successfully against foreign goods here and abroad, he added.

Now that it is in place, implementators are defeating its goal, he lamented.

Captains of industry have long been complaining that power rates in the Philippines have been the second highest in the whole of Asia, next only to Japan.

With the cost of power making up at least 20 percent of the cost of production, and rates always going up, Napocor and its distributors have been pricing Philippine goods out of the market. – Abe P. Belena, Philexport News and Features