DTI organizes bilateral deals between ecozone locators, power firms

MANILA, Philippines - The Department of Trade and Industry (DTI) is organizing bilateral agreements between economic zone locators affected by the lapse of the Ecozone Rate Program (ERP) and power producers which do not use WESM like Angat in order to help protect the firms from high electricity costs.

Currently, the ERP benefits 279 customers in industrial areas. These customers contribute 43 percent to Philippine manufacturing exports or around $19 billion and provide more than 222,213 jobs.

The government is scrambling to find a solution to the problem because the ERP is set to expire on Dec. 25.

In an interview with reporters, Trade Undersecretary Cristino L. Panlilio said they may have found a way to help the locators. He said the rates may not be as low as those provided under the ERP but it is still lower than commercial rates. “It (rates) will be higher but it will still be competitive.”

He said the solution they are looking for should not entail any cost to the government. “Don’t use WESM. We will give them bilateral supply agreements that will not use the WESM mechanism.”

Panlilio said the zones where the affected locators can help the firms or they themselves can enter into bilateral agreements with Angat and then not use WESM. Panlilio said they have already spoken with Angat and the power producer has already agreed because it is owned by PSALM. Other firms may be a challenge especially those privately owned. The others they are eyeing are Ambuklao, Binga and Bakon.

For the private sector, Panlilio conceded that the government may have to give them some form of incentive in order for them to agree to lower power rates.

He said they are looking for cheaper sources of power like hydro and geothermal plant. He said they already approached Sual Coal fired plant but they were turned down because coal power is expensive.

“Hopefully we can fix this before Christmas. This can be our Christmas gift to them,” Panlilio said.