Energy chief warns of power shortage in 3 — 4 years

Energy Secretary Vincent Perez called yesterday for action to prevent an impending power shortage in the next three to four years.

"We have to act now," he said when asked if the recently approved rate increase of the National Power Corp. (Napocor) could lure investors to the power sector.

"We don’t want to be (in) the same situation (as) in the 90s. We do not wish that to happen again."

Perez said Napocor’s privatization and the new rates granted by the Energy Regulatory Commission (ERC) "in some way" will help avoid the emerging power crisis.

"The sooner we privatize Napocor assets will help us attract new investments to avert the power shortage," he said.

Answering a query from Sen. Miriam Defensor-Santiago during a Senate hearing yesterday, Perez said a power crisis is expected to hit Luzon in 2008, and the Visayas and Mindanao the following year.

The country will need at least $6 billion in new investments in the power sector in the next 10 years, studies show.

It would take at least three to five years to put up a new power plant.

Some consumer groups and businessmen have expressed concern that the issue of power crisis in the near-term has been placed on the back burner.

In an advocacy paper entitled "The Roadmap to More Foreign Investment," the American Chamber of Commerce in the Philippines said it is concerned about a possible power shortage.

"Given the four to five-year gestation period in building new power plants, we appear to be entering in a critical period in which further drift in implementing power sector reforms will increasingly doom the economy to repeat its 1991-1994 blackout experience," the paper said.

Amcham cited Department of Energy figures which forecast power demand to grow at an annual rate of 9.7 percent from 2003 to 2007.

"Experts predict the possibility of demand exceeding supply in 2006-2007 in the Luzon grid if no additional capacity is built before then," the paper said.

Members of the Cebu Chamber of Commerce and Industry (CCCI), in a separate statement, said they are worried that an impending power shortage in the province will derail economic progress.

"The need for additional capacity has to be met, otherwise business will suffer," CCCI president Robert Go said.

"We hope government will foster the necessary environment to attract the investments which would ensure that Cebu’s power needs in the coming years will be met."

Go said the DoE’s Philippine Development Plan indicates that Cebu will require an added capacity of 100 megawatts in 2008, 100 MW in 2009, 50 MW in 2010, 150 MW in 2011 and 50 MW each in 2012 and 2013 or total of 550 MW from 2008 to 2013.

This will entail $550 million worth of investments in the power generation sector, he added.

Foreign investors have welcomed the ERC’s decision to grant Napocor a rate increase of 98 centavos.

Ed Bautista, Mirant Philippines Inc. president, said the ERC’s decision definitely makes the Philippine power generation sector more attractive to foreign investors.

"At a time, the generation sector languished under the perception that it is not reflecting the true cost of generation," he said.

"The recent development should change this perception. We hope that this will also help in the acceleration of the Napocor’s privatization.

"This will send a good signal to potential and existing investors that the government is doing something to solve the financial problems of Napocor."