Japan, other foreign chambers of commerce oppose amending EPIRA

The Japanese Chamber of Commerce and Industry of the Philippines, Inc. expressed opposition over the weekend to the plan to amend the Electric Power Industry Reform Act (EPIRA) which will undermine investors’ confidence in the country.

 In a letter sent to President Arroyo last Dec. 14, the group’s president Toshifumi Inami said the plan will affect the credibility of the Philippine power sector reforms.

The letter of the Japanese business group was also sent to Energy Secretary Angelo Reyes, Trade Secretary Peter Favila and officials of both chambers of Congress.

The Japanese group, which includes multinational corporations in the country, is the largest group of foreign investors in terms of investment.

Japanese investors account for at least 60 percent of the total foreign direct investments in the country’s power sector alone.

In his letter to the President, Inami said: “Changing the rules in midstream, especially at a time when EPIRA’s power reforms are beginning to work, will not bode well for more investments in the sector.”

“For instance, the Wholesale Electricity Spot Market is fully functioning and the generation sub-sector is steadily drawing a number of new and foreign investors to eventually make up a competitive market. The privatization of the generation assets of the National Power Corp. is gaining momentum and can hopefully be replicated with the privatization of NPC’s independent power producer contracts as well,” he noted.

Amending the EPIRA was among the priority legislative measures pushed by Mrs. Arroyo in her State of the Nation Address last July.

Inami said that amending the EPIRA at this point would overturn the gains in the country’s power sector.

The Japanese business leader also encouraged the government to just continue with the full and proper implementation of the EPIRA to achieve its primary objectives of providing a competitive and vibrant electricity industry that can play its role in making the Philippines competitive.

Inami said the Japanese chamber welcomed in June 2001 the passage of the EPIRA or Republic Act No. 9136.

The concern of the Japanese businessmen was made after the Joint Foreign Chambers (JFC), of which it is also a member, came out with a statement reiterating its call on the Arroyo government to implement the EPIRA rather than amend the law.

In a statement, the JFC said that instead of amending provisions like the “Retail Competition and Open Access,” the legislative and executive branches of government and even the private sector should conduct dialogues on alternative strategies to achieve the policy objective of open access and retail competition.

“This goal has long been desired by Philippine industry and foreign investors in order to make Philippine electric power prices more competitive,” the group said.

According to the chamber, the only remaining unmet conditions required to begin open access is for the government to privatize at least 70 percent of the total capacity of generating assets of the NPC in Luzon and Visayas and transfer of management and control of at least 70 percent of the total output of power plants under contract with the NPC to administrators of independent power producers.

The chamber also expressed concern that the privatization of the IPP administrators has not begun.

“PSALM (Power Sector Assets and Liabilities Management Corp.) has  promised to complete documents for the bidding of the Luzon IPP administrator by the first quarter of 2008. We should wait until then to see the results,” the group said.