EDITORIAL - Restructuring the energy sector

Malacañang scored a victory when both chambers of Congress ratified the bicameral conference committee report on the Power Sector Reform Bill. President Arroyo, whose administration resorted even to text messaging to solicit public support for the bill, is expected to sign it into law today. Investors see the passage of the law as proof of the administration’s resolve to institute much needed reforms, particularly in the power sector. Enactment of the law is also expected to free up millions of dollars in foreign loans and direct aid that have been frozen by bilateral and multilateral institutions since last year.

While the government has dangled a power rate reduction in the coming months as sweetener, certain groups are threatening to take their protest to the Supreme Court. When enacted, the law will pave the way for the privatization of the National Power Corp., whose massive debt will be shouldered by the government. Critics fear that privatization will mean a mass layoff at the Napocor. The government will have to address these fears.

The new law will reorganize electric cooperatives and deregulate the energy sector, allowing competition to improve power supply and services. One way of attracting new players is by showing investors that the sale of Napocor assets will be transparent and aboveboard. Much is expected of the new Energy Regulatory Commission that will soon be formed.

It wasn’t too long ago that Metro Manila and the rest of Luzon reeled from blackouts that sometimes lasted as long as 12 hours a day. For many years the government failed to prepare for the energy needs of a booming population and a growing economy. When the impact of this neglect was finally felt, sweating investors fled while those who remained saw their businesses crippled by power outages.

A new government tackled the problem through an emergency program that quickly ended the blackouts but raised electricity costs. It also became clear that the power crisis could recur unless long-term solutions and a general restructuring of the energy sector could be implemented. Thus the Power Sector Reform bill was crafted. For most of the people, the main concern is whether the new law will mean a steady, adequate supply of electricity at affordable prices. After six years of deliberations, this new law must live up to its avowed objectives.