DOE to intensify efforts to avert power shortage

Department of Energy (DOE) Secretary Vincent Perez vowed yesterday that government will intensify efforts to stem a looming power shortage and ensure competitive power rates by 2010.

Perez said that with the fresh mandate of President Gloria-Macapagal Arroyo, government can better address power-related problems. He said various government agencies are meeting shortly to identify priority areas and the power sector has earlier been identified as one sector that will be given top priority.

"With the cloud of uncertainty over, we can now focus on the pressing problems of the local power sector and hopefully, come up with policy solutions and measures to attract more local and foreign investors in the electricity sector," said Perez.

Perez admitted that investors have stayed in the sidelines because they are awaiting government’s concrete responses to the biggest problems confronting the local power sector.

One is the looming power shortfall. As early as last year, the Visayas and Mindanao regions have already been experiencing shortages in meetings its peak loads. Unless power generation capacity is increased and transmission infrastructure and efficiencies are improved, power shortages are seen to spread nationwide by 2007.

The DOE estimated that the economy could lose up to P2 billion a day if a 24-hour blackout nationwide occurs.

Government estimates that with a projected gross domestic product (GDP) growth of five percent in the medium-term, the country will require at least 10,000 megawatts of new power generation facilities for growth to be sustained.

Under the Philippine Energy Plan for 2004-2013, about P500 billion is required to set off programs in the oil, gas, hydropower, geothermal and coal sectors.

However, there has been no major power generation projects in recent years that will ensure adequate power supply in the coming years because of discouraging measures such as the renegotiation of power contracts of independent power producers (IPPs) contracted during the power crisis in the 1990s.

Because of the urgency of solving the power crisis, these IPP projects were fast-tracked although this proved to be more expensive. Thus, the country has one of the highest power rates in Asia, second only to Japan.

Another problem that requires immediate action is the staggering debt of the state-run National Power Corp. (Napocor) which now stands at P500 billion. While government said it has no choice but to absorb the company’s debts, the Electric Power Industry Reform Act passed in 2001 is specific that government can only assume up to P200 billion of Napocor’s obligations.

Napocor’s financial woes is being blamed on government’s inadequate equity infusion into the power firm which forced it to seek foreign loans to sustain operations.

Perez said, however, that government will come up with concrete measures to improve the electricity sector which, he said, should renew the confidence of investors to start looking at new opportunities in the local power sector.