At the rate the privatization of National Power Corp. (Napocor) assets is going, there is no more need to amend the Electric Power Industry Reform Act (EPIRA), a group of power producers said.
Philippine Independent Power Producers Association (PIPPA) president Ernesto Pantangco said the proposed changes to amend the EPIRA, specifically lowering the open access threshold from 70 percent to 50 percent and instituting cross-ownership restrictions between generation and distribution, will not actually lower power rates as there will still be a dominant player in the market in Napocor.
He said these amendments may even undermine the privatization process of the Department of Energy (DOE) and the Power Sector Assets and Liabilities Management Corp. (PSALM).
“Despite the success being achieved by the combined efforts of DOE and PSALM, it is lamentable that certain groups continue to undermine the privatization process through proposing new amendments to the EPIRA,” he said.
Pantangco also said the only way power prices can be brought down is to have enough competition in the market, and this can only be achieved through the privatization of Napocor assets.
“We have enough safeguards in the current EPIRA provisions such as the 30 percent generation market share cap and 50 percent limit on contracts with affiliated entities. Both provisions will effectively prevent the emergence of monopolies,” he said.
PIPPA also noted that there is no need to change the rules midstream and create new regulatory uncertainty at this time when investors are finally taking a closer look at Philippine power assets.
“The participation of major international power utilities in the PSALM privatization is proof enough that the EPIRA is beginning to work. We are now in the international limelight. Don’t stop the momentum by opening a Pandora’s box of amendments to the law which will only create needless confusion and concern among power industry investors,” he said.
At the same time, PIPPA lauded outgoing Energy Secretary Raphael P.M. Lotilla and PSALM president Jose Ibazeta for the successful privatization of the 600-megawatt Masinloc coal-fired power plant at an unprecendented price of $930M or $1.55 million per megawatt.
Pantangco said the winning bid of the Singapore-based AES group, together with the participation of major foreign groups such as Suez Tractabel, International Power, Shenua and First Gen shows the confidence of international investors in the PSALM privatization and the transparency of the process.
According to investment bankers, the international sale of Mirant’s Philippine assets to TEAM Energy (TEPCO-Marubeni) group for $3.6Billion and the bids submitted for the Masinloc privatization clearly shows the Philippine power industry is once again in the radar screens of major foreign groups.