ADB willing to help avert looming power shortage

The Asian Development Bank (ADB) said yesterday it was willing to undertake some form of "emergency investment" in the power sector to facilitate long-delayed reforms and avert a looming power crisis.

No amount was mentioned but ADB officials revealed they were in talks with the Arroyo administration to determine the power sector’s needs and what assistance the Manila-based bank could provide.

Peter Giraud, director of the infrastructure division of the ADB’s Southeast Asia Department, said one of the options they are considering to jumpstart reforms in the power sector is a credit enhancement facility.

He said it was too early to peg an amount but during their discussions with government officials, they considered several forms of possible intervention to avert an expected power supply shortage.

"We have been saying in the past that we wanted to see some progress in the power sector reform program before we provide more assistance," Giraud said. "We wanted to see some progress, specifically in privatization."

However, he said under the circumstances, the ADB may have to intervene in order to spur the progress it has been waiting for.

"We are looking at a potential shortfall in power supply so the flavor of the situation has changed and we’re also saying that we can’t sit around waiting anymore," Giraud said. "In this emergency, we can’t just sit waiting for progress. So what we are saying is that, ‘Is there anything we can do now to get this thing moving forward?’"

He added that the ADB hopes to reach "some agreement" with the Arroyo administration along the lines of sectoral reform.

"There are three possibilities: there may be emergency investment, there may be guarantee component or comprehensive assistance," Giraud said.

He noted that the ADB has been involved in past power development programs, and that bank officials will include policy reforms as one of the conditions for their assistance.

"Everyone agrees that if no investment in power generation is made, there will be a probable crisis," Giraud said.

The ADB is looking at the construction of more transmission infrastructure, according to Giraud, since this is where critical funding is needed.

"Because of the geography here, there are places that need to be connected to the power supply, which becomes useless unless the transmission infrastructure is there," he said.

In mid-2003, presidential deputy spokesman Ricardo Saludo said the sale of the facilities of the National Power Corp. (Napocor), estimated to be worth more than $2 billion, is part of the government’s privatization program crafted even before President Arroyo assumed power in January 2001.

He said proceeds from the sale of the Napocor facilities will be used to fund specific anti-poverty programs of the government. The sale is intended to get much-needed investment in the power sector and thus ensure there will be no power shortages in the future, he added.