Gov’t to back higher Napocor rates — Perez

CLARK FIELD, Pampanga — The government is willing to support a rate increase by the National Power Corp. (Napocor) if the Energy Regulatory Board (ERB) finds the increase "justified," Energy Secretary Vince Perez said.

"The name of the game now is being bold and decisive, and if that means power rates may have to go up temporarily before they go down, then that is what we have to do," Perez told reporters covering the Cabinet meeting here last week.

He said that among the "drastic measures" being considered by President Arroyo to "help bring down" the cost of electricity is the partial privatization of Napocor.

Mrs. Arroyo gave the Department of Energy (DOE) 18 months to ensure that 70 percent of the power generation assets of Napocor are sold to private investors.

Perez said the measures are necessary to avert a power crisis by 2006, especially in Cebu, Panay and southeastern Mindanao. He noted that power demand in these areas grows by 12 to 14 percent annually.

"Having a (power industry) that can attract investments is something that we must develop. Hopefully, in the next 18 months we will be able to privatize Napocor. That is the instruction of the President to her energy team," he said.

Perez expressed confidence that the government’s "fighting" timetable would be met "now that political uncertainty is gone."

While the problems of the power sector "have been languishing for many decades," there has been an increase in investor interest in the power industry, he said.

Perez said the sale of Napocor’s power plants will allow more players to enter the power industry and create competition that will eventually bring down the cost of electricity.

"Once all plants are sold, it will be a deregulated market since the government will no longer control the rates of generation," he said.

But Perez said that government will hold on to 30 percent of Napocor’s power generation assets.

Included in the 30 percent are the hydroelectric power plants in Mindanao, whose sale is forbidden by law, and power plants in so-called "missionary areas" that private investors are likely to avoid, such as islands like Batanes, Catanduanes, Masbate and Siquijor and isolated reefs.

The ERB will also retain its power to defend consumers from "market abuse."

Perez said that power transmission and distribution will continue to be regulated since by nature they are monopolies.

He said that the President hopes to have by 2010 "a healthy power industry where the players are competing on who could sell the cheapest power."