PEZA appeals PSALM decision on ecozone power rates

MANILA, Philippines - The Philippine Economic Zone Authority (PEZA) is asking President Aquino to intercede and ask PSALM to reconsider its decision not to extend the Ecozone Rate Program (ERP) because the removal of the special rate may result in irreparable damage in the economy and the country’s competitiveness as an attractive investment destination.

PSALM has earlier announced that it will no longer extend the ERP provided under the Memorandum of Agreement between Meralco and the National Power Corp. (NPC). There are 279 manufacturing enterprises availing of the special ecozone rate which accounts for 43 percent of the country’s manufacturing exports.

In a letter to Trade Secretary Gregory L. Domingo, PEZA Director General Lilia B. De Lima said that they have already written to PSALM president and chief executive Emmanuel R. Ledesma Jr. urging the firm to reconsider its decision.

De Lima likewise asked Domingo to appeal for the intercession of President Aquino to sustain the special ecozone rate while the Retail Competition and Open Access (RCOA) is not yet in place.

“The national competitiveness of the country is also at stake since the Philippines has the most expensive electricity in Asia,” de Lima said in her letter. “High power rates are driving away potential investors because electricity costs account for 40 to 50 percent of exporters’ operating expenses,” she added.

At the same time, de Lima said that potential investors will have reservations in doing business in the country and those that are already here might relocate to other countries such as Vietnam and China.

De Lima said that under the NPC-Meralco MOA the special rate can be extended for a year if the RCOA is declared or implemented prior to the expiration of the NPC-Meralco Transition Supply Contract.

“Thus it is our position that while ecozone locators cannot enjoy yet the benefits under the RCOA regime, the government should continue providing the special power rate in order to support the competitiveness of these export manufacturing enterprises in the world market and prepare them for the full implementation of the RCA on December 26, 2012 as proposed by the RCOA steering committee,” de Lima said.

She said PEZA together with Meralco, the Semiconductor and Electronics Industries in the Philippines Inc (SEIPI) and the Japanese Chamber of Commerce in the Philippines (JCCP) have separately written the NPC-PSALM and the Department of Energy (DOE) for the one year extension of the ERP.