Power industry players say GMA’s action plan ‘achievable’

Realistic and achievable.

This was how major players in the power industry described the 10-point action plan recently unveiled by President Arroyo to resolve the controversial purchased power adjustment (PPA) issue and reduce the cost of electricity by P1.40 per kilowatt-hour.

David Tan, the former president of the Philippine Independent Power Producers Association (PIPPA) said a power retail rate of P5 per kwh from the May billing of P6.40 per kwh will also significantly help the country’s overall competitiveness.

"The rate will drop the country’s power cost of $0.125 from second highest in Asia to sixth place behind Japan, Singapore, Cambodia, Hong Kong and Brunei," Tan said.

At a news conference Friday night, Mrs. Arroyo laid out a 10-point program that she said would help reduce the cost of electricity for end-users.

She said government regulators have already ordered state-run National Power Corp. (Napocor) to cut rates by 6 centavos per kwh, even though the utility had sought permission to raise tariffs by 17 centavos.

She also ordered the state utility to put the new rates in effect within a week "so that we can get more relief."

The President vowed to "squeeze blood from stone" to cut high electricity rates that had caused her political stock to dwindle less than two years before the next presidential election.

Power One president Crisogonus Herrera said the President’s 10-point action plan is comprehensive and appears to cover most of the problem areas and concerns that contribute to the increase in power rates.

Herrera stressed, however, that the key to success is in the execution of the plan.

"The President’s promise that she would be staying more at Malacañang to work and to reduce her speaking engagements in the coming weeks to oversee that the solutions are pursued in a short time, is very encouraging and augurs well for a speedier realization of lower electricity rates for both consumers and the business-industrial sectors," he said.

Tan, the immediate past president of the PIPPA which produces more than half of the country’s power requirements, said a $0.10 per kwh rate is achievable.

"In fact, if the Philippines can plug all the loopholes in its regulatory system, it can beat South Korea’s rate of $0.829, or P4.15 per kwh. However, if the country can sustain the $0.095 rate until 2005, it will still be doing well considering the accumulated costs of fast-tracking power projects in the early to mid-1990s," he explained.

Herrera agreed that achieving the P5 per kwh rate will be easily achievable.

"Bringing the electric power rate down to P4 will likely be the effort that could be likened to squeezing blood from stone. We sell power at only P2.40 per kwh to Napocor," he said.

Herrera said among the major concerns that could significantly help achieve the P5 per kwh rate in the 10-point plan include the establishment of the competitive wholesale electricity spot market which will provide a trading platform for power price competition and give power users a fair and transparent way to determine realistic power costs.