Congress urged to speed up passage of power reform bill

Congress has been urged to speed up the passage of the power reform bill to entice foreign and domestic investors to do business or to expand their businesses in the Philippines.

"The government, including its economic managers, must be able to stimulate the interest of foreign and local investors especially in the supply side which likewise creates more jobs," Calixto V. Chikiamco, chairman and chief executive officer of Phoenix Iron and Steel Corp. said.

Chikiamco is also the president and chief executive officer of Rocsip Trading and Technology Corp. and chairman of the Foundation for Economic Freedom Inc. (FEF).

"Government is bankrupt and it needs the private sector to bring in the business especially in the manufacturing sector which offers greater employment opportunities. In July alone, the country registered an 11.1-percent unemployment figure almost comparable to the disastrous 13 percent recorded nine years ago," the executive said.

However, business is concerned with the quality of electricity and the power rates. Power rates in the Philippines are said to be the third highest in the Asian Pacific region, while the quality of electricity is considered among the poorest.

Investors looking for business opportunities in the power sector have expressed concern over the non-passage of the power reform bill.

"They want to know just what are the rules of the game, meaning they will not commit their hard-earned cash in a country unless they know the laws governing the electricity and power sector," the FEF chairman said.

In the past two years while the power reform bill was being processed in Congress, nearly 80 companies, both foreign and local, have expressed interest in making investments in the energy sector. However, the delays have resulted in most of the foreign investors looking at other Asian countries like Vietnam, China and Indonesia for opportunities.

Officials of the debt-ridden National Power Corp. (Napocor) admitted that several representative offices of foreign investors have already closed down and moved to other Asian countries.

"They wanted to know what the rules were but they could not wait for the passage of the bill," they told The STAR.

Chikiamco and Napocor officials pointed out that it takes a long gestation period for new capacities to be established. The sooner the bill is passed the sooner the country can entice foreign investors in the energy sector to help put up more capacities, they said.

The Department of Energy (DOE) said in its 10-year power plan that the country’s power demand will increase by almost 50 percent requiring investments amounting to $32.5 billion.

The FEF chairman stressed that with a cash-strapped government experiencing a deficit of nearly P90 billion, the private sector will be "the only machine that can fuel the development of the energy sector and ultimately the economy."

"Without the energy reform bill, questions on property rights and stable rules can not create a competitive environment that offers competitive power rates and quality electricity," he said in a telephone interview.

A study done by the University of the Philippines Economics Foundation showed that after the electricity industry is restructured based on the power reform bill, households can save as much as P1,000 per household per year, or a conservative total of P13.6 billion per year. Over the long term, industrial electricity rates will decrease by an estimated 27 percent comparable with its Asian neighbors.

The power reform bill is at the bicameral committee level or one step away from ratification. However, certain quarters including a solon from the south continues to stall its passage.

The FEF chairman implied that if the power reform bill is not passed by the 11th Congress, work on the passage will have to start from scratch again with the next Congress.

That may mean major power shortages or blackouts, economic disruptions, high power rates, and an enlarged deficit for Napocor resulting in a bigger deficit for the Philippine economy.