Gap

We can’t blame everything on climate change — although that might be convenient. The rotating brownouts and the estimated P8.8 billion our agriculture already lost so far are consequences of the infrastructure gap we allowed to fester because of our chronically weak fiscal position.

The crippling power shortage Mindanao is experiencing, as I pointed out in my last column, is a consequence of overdependence on the Agus hydroelectric facility and the failure to invest in added generating capacity. That is more than mere failure in planning for energy security. It is also a case study on how populist politics provides a disincentive to strategic investments.

The sad tale of Mindanao’s power situation is not an aberration. It is just the most extreme symptom of what is a national malaise.

When Cory Aquino mothballed the Bataan nuclear plant and then, for good measure, abolished the Ministry of Energy because she disliked its minister, the whole country was thrown into darkness. There was no energy planning to speak of and, when power shortage struck, the economy went into free fall.

Fidel Ramos, elected in literally the darkest of times, had to scramble to increase our generating capacity. With a shattered economy and a people in despair, we negotiated with power suppliers from the weakest imaginable negotiating position. That produced something akin to a pact with the devil: we achieved sufficient generating capacity but at the cost of expensive oil-fired power plants and onerous take-or-pay provisions.

When we had sufficient power, our grandstanding politicians played to the gallery and went after the independent power producers who took the risk of investing in a shattered economy only because of take-or-pay guarantees. Contracts were renegotiated and some of the investors left in a huff.

Since then, we have had difficulty attracting investors into our power sector. Attracting investments is not easy after the IPPs became fodder for grandstanding politicians and contracts — especially after the Manila Hotel and Piatco cases — seem to be worthless pieces of paper in this country. With unlimited powers of review granted by the 1987 Constitution, the court can simply declare any contract disadvantageous to the public interest.

We did not really put in enough effort to re-use the Bataan facility either as a coal-fired or a nuclear plant. That will involve a large contract and will certainly attract politicians around it like so many unwelcome flies.

Our best scientists are now insisting we should go on and use the nuclear plant as originally designed. Nuclear power is, by far, the cleanest and cheapest source of baseload generating capacity. Even Abu Dhabi, a major oil exporter, is investing in its own nuclear plant for reasons of incredibly lower costs.

There is, however unscientific, a dread of nuclear power among the more articulate groups in our society. Like the hippies of yore, they preach the virtues of solar or wind power — without telling us that they are both incredibly expensive sources of energy and technologically inadequate as sources of baseload generating capacity.

In a word, alternative energy sources cannot at this time provide the energy supply we so desperately need — unless we are willing to pay a hundred-fold the electricity costs we now pay. Even as things now stand, our electricity is already among the most expensive in the world.

Even as we set aside the nuclear power debate, we have no clear policy about how much power reserves we should maintain. We just wander along and scramble for emergency sources of power when it runs short. As a result we always end up with the most expensive and dirtiest modes for generating power.

Maintaining ample power reserves is costly. But having power shortages is even costlier.

Industrial economies maintain huge power reserves — mainly because they realize that shortages are immensely more expensive. Japan, for instance, maintains 50% power reserves — which is the main reason it has the most expensive power rates in the region.

If we plan our energy future on a longer term, we should be able to alter our energy mix (the precise combination of sources of power) so that we might be able to bring down energy costs to competitive levels in, maybe, two decades. But we have such a notoriously short planning horizon. Unless that is corrected, our power situation will be constantly vulnerable and expensive.

Some hard decisions will have to be made about our energy security by the next administration. Hopefully, that next administration has the competence and political capital to make hard decisions.

The brownouts we now experience are a result of the precarious power reserves we maintain. When one generating unit conks out and is shut down for maintenance, a shortage happens. We cannot go on like this. No self-respecting, truly competitive economy, should.

The same sins that cause power shortages also cause water shortages. El Niño is not anything new. We need to build more dams and water impoundment facilities to better deal with these cycles, which can only be more severe in the future because of climate change.

We accomplish nothing by simply declaring states of calamity (which are mere instruments for budgetary releases) each time shortages happen. We need a comprehensive plan to close the infrastructure gap that seasonally undermines our economic performance.

It is not enough to say we need political will to do this. What we really need is enhanced state capacity to plan strategically for the country. Either that or we simply stumble along to the end of our days.