Drilon urges gov’t, private sector to work together to avert power crisis

Senate President Franklin M. Drilon has called on the government and the private sectors to immediately get their acts together to avoid a power crisis that may paralyze the Philippine economy.

In a speech before the Integrated Electrical Engineers of the Philippines, Drilon underscored the need to take necessary steps now to avoid a massive power shortage in the future.

"Economic development is essential to spur the growth of professionals such an electrical engineers. To achieve economic development, we must address and forestall an impending power crisis. This is a very important area to focus on because of its huge potential to severely harm our economy. We will be losing millions of dollars in possible foreign investments," he said.

In the case of a 24-hour nationwide blackout, the Department of Energy estimates the economy would lose up to P2 billion a day, the lawmaker noted.

"Certainly, we all dread another power crisis similar to what we had more than a decade ago. Practically every sector of our society suffered from that costly experience. The devastating effect on the quality of life of our people was immeasurable," Drilon said.

According to Drilon, there is also a need to start the construction of new power plants. "Time is of the essence. The gestation period for building new power plants is about four to five years; hence we must start building them now to preclude rotating brownouts in 2007 and 2008."

"The Philippine power industry will need $2 billion to $3 billion over the next five years for generation plants alone. Since this will require investing billion of dollars which the government cannot afford at the moment we need to attract foreign investors to construct these power plants," he added.

He pointed out that "we have to entice more players to invest in the power industry because more competition means lower prices for consumers over time".

He said the Philippines now has one of the highest power rates in the region thus diminishing its competitiveness. "Foreign investors have been complaining of high electric power costs compared to other regional economies such as China,  Korea,  Thailand and Malaysia. In the Philippines, the rate to industrial consumer is $0.09 cents per kilowatt-hour compared to $0.053 cents in Thailand and $0.05 in Korea, $0.077 cents in China and $0.063  cents in Malaysia," he noted.

He further noted that to improve the Philippine regional industrial competitiveness, there is a need to lower the ratio of industrial power rates to residential rates from 80 percent to around 60 percent which is the average in other countries and closer to Korea’s 50 percent.

The reforms under the Electric Power Industry Reform Act of 2001 (EPIRA), he said, are designed to reduce the cost of electricity in the long term.

But he said government needs to accelerate the privatization of assets, elimination of cross-subsidies and introduction of a wholesale electricity market.