Time for reflection

According to Dave Murphy, M.D. based in America, the Philippines has a 40 percent excess capacity to generate electrical power. He said that the first step to a solution is to stop looking at it as a problem and look at it as an opportunity. Attitude is everything. Thinking of ways to take advantage of an opportunity is more likely to be productive than in thinking of ways to solve a problem.

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Dr. Murphy suggested that the excess power be made available at a discount to businesses that will invest in new plants or processes. He suggested that it be offered to investors but certainly at the advantages offered first to Filipino entrepreneurs. One offers tax incentives regularly to attract foreign business in special economic zones. It should not be that difficult or different to offer discounted electrical power as an incentive to investors, foreign or domestic. And to utilize unused resource and generate jobs, taxes and secondary businesses and industries. If transmission facilities are the limiting factor, offer incentives to locate the industry near the generation facilities.

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Another possibility is to speed up the development of transmission lines. There are millions of Filipinos who still do not have access to electrical power. Not all of them will be able to pay it but many can and that will diminish the effect of the PPA. Perhaps this is an appropriate use of the "pork barrel" funds. Then the politicians can legitimately claim that they brought power to the people, instead of strong-arming Napocor officials to pay for it out of the company budget. Perhaps international funds are available to assist with provision of electrical power to rural areas.

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"My bias in solutions is to find ways to use the resource. Another approach is to devise different ways to pay for it. Presumably the poorest people use the least electricity. There are already differential rates to reward the users of the smallest amounts of electricity. Perhaps these could be increased to favor even more the poorest of the poor. This will require caution because the largest users are commercial establishments. Anything that increases the cost of doing business has ramifications that may negate the benefits derived and should be instituted with circumspection, Dr. Murphy stated.

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Perhaps the government should subsidize a portion of the smaller bills. The relevant data could be collected fairly easily with computerized billing. The government could pay maybe 40 percent of the amount of the smallest bills, leaving the users to pay 60 percent, with gradations down to 5 percent subsidy for those who use more but still less than average. Use of higher amounts by people like us will be taken as an indication that we are willing to pay for the full amount we use. Yes it hurts, but that is the cost of having electrical power.

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Dr. Murphy stated that these are just a couple of ideas he has come up with. With all the talent in the Philippines, there are lots more ideas and better if we will only look at this as an opportunity rather than a problem.

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Dr. Murphy said there are two other issues he would like to raise. The first is the reliability of the electrical power supply. In part, economic constraints have required continued use of antiquated and less sophisticated equipment, increasing the chances of failure. In short, power failures are one of the facts of life in a small, poor country. As a non-engineer, he stressed that his knowledge is marginal but he stressed that the different power grids across the US constitute a de facto redundant system, so that if one grid experiences problems, the others can provide supplemental power to prevent wide-spread system failure.

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Since the Philippines has a smaller number of power plants and a less extensive grid system, it seems reasonable to assume that the redundancy factor will be smaller and that even with the best equipment there will be a greater chance of widespread failures. Dr. Murphy does not think it is anyone’s fault; it’s just how things are. Even when one become a small, prosperous country, power failures may still be a fact of life.

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The second issue could be summarized by "There’s no such thing as a free lunch" or the older adage, "He who wishes to dance must pay the piper." During the Arab oil embargo of the last century, US politicians attempted to protect their constituents by establishing controls on the price of oil. Just as in the Philippines, some individuals tried to beat the system and reap excess profits. Unlike the Philippines, most were caught, prosecuted, convicted and punished. But no one was able to break the laws of economics.

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Dr. Murphy said that when price controls made it unprofitable to develop new oil sources, no new oil sources were developed. The end result was gas shortages with long lines of cars at gas stations, rationing and driving restrictions, all of which are the petroleum analog of electrical power failures. And as soon as the embargo was ended, everything went back to the way it was before.

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Dr. Murphy said that there is an old story, properly told with a Jewish accent, which he recasts for the Philippines. Mrs. Rodriguez is complaining to Mrs. Aguam, a neighborhood butcher, about the cost of her fresh chickens, "Seventy pesos per kilo! Mr. Yambao on the next block is selling his chickens for fifty pesos per kilo."

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Mrs. Aguam replies, "Well, why don’t you go buy your chickens from Mr. Yambao?" He’s out of chickens, answers Mrs. Rodriguez. "I’ll make you a deal," says Mrs. Aguam, "when I don’t have any chickens, I’ll sell them for forty pesos per kilo."

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The hard lesson for the Philippines is that political laws do not alter economic laws. Power plants cost money and power generation costs money. If you are not prepared to pay the cost of electricity, be prepared to sweat in the dark.

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Thoughts For Today:

Do not pray to be sheltered from problems
but to be fearless in facing them.
Do not be afraid of pain but
ask for a heart that conquers it.

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Each day our goal is to touch one’s heart,
encourage one’s mind and inspire one’s soul.
May you continue to be blessed
and be a blessing to others.

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My e-mail addresses: [email protected] and [email protected]