Gov’t sees light on power sector reforms, says foundation head

"We commend the Arroyo administration for finally seeing the light and is now advocating many of the energy reforms we have been seeking since last year," said Antonio G. Hombrebueno, chairman of the Foundation for National Development (FND), over the weekend.

Hombrebueno cited recent key policy pronouncements of Energy Secretary Vicent Perez, notably on rushing the privatization of the Nation Power Corp. (Napocor) and on finally admitting that the power sector’s problem is lack of investments due to the policy of maintaining artificially low power rates.

"We have been espousing these reforms and policies since last year, and we are happy that Secretary Perez has finally admitted that these policies are necessary if we are to rescue our power industry," Hombrebueno said.

He said the key now is to formulate long term and workable solutions to address the deep-seated problems plaguing the power industry, even as he noted that government has no choice but to assume Napocor’s more than P500 billion in debts.

The FND chief quickly added, though, that the government assuming Napocor’s debts is "necessary but insufficient" in a bid to solve the country’s power problem. He pointed out that Malacañang should complete the restructuring and privatization of the power industry by fully implementing the Electric Power Industry Reform Act (Epira). The law provides the most viable solutions to the power industry’s problems which include such critical issues as politically repressed electricity rates, inadequate power infrastructure and foreign investment lack.

Hombrebueno noted that the current policy of subsidizing government corporations has bred inefficiency and complacency. "After so many years of pampering, Napocor has nothing to show but accumulated debts of almost $10 billion and losses worth P100 billion. These losses add to the huge deficit of government and this imperit the country’s economic viability."

Hombrebueno also said government should stop interfering in rate fixing. In 2001, President Arroyo ordered that Napocor’s purchased power and currency adjustment be pegged at no more than 40 centavos per kwh. But since 2001, crude oil prices and currency exchange rates have been fluctuating, resulting in continued losses for Napocor.

"The Arroyo administration must now change its course. Since 2001, government has been practicing the misguided version of populist economics since it assumed office in 2001. It has prevented power rates from reflecting their true cost, leaving an economically unviable power sector which no one wants to invest in.