Stable power supply vital to economic prosperity

If there’s anyone in the world who has circled the globe extensively, US Secretary of State Antony Blinken wins hands down. His schedule has been jam-packed with travels to Europe, Asia and the Middle East, with the last stop in Tel Aviv to discuss the ongoing situation in Gaza.

But his recent visit to Manila emphasizes the importance that the US places on its alliance with the Philippines, which he described as “more than rock solid,” not only in terms of security – which is absolutely important – but also in the area of mutual economic prosperity. 

Secretary Blinken’s second visit to the Philippines comes ahead of the first ever tripartite summit involving the Philippines, the US and Japan scheduled next month in Washington, D.C. as it reaffirms the commitment of the US to the Indo-Pacific, with the upcoming trilaterals auguring “a new horizon of cooperation” among the three nations.

President Marcos Jr. was pleased to meet with Secretary Blinken, hosting a small dinner in Malacañang where I happened to be seated beside the US Secretary of State – giving me the opportunity to emphasize to him that our economic ties are key to our long-term, stable relationship. I told the secretary the President is very keen to see more investments from the United States in the area of energy, food security, semiconductor and digital infrastructure.

While defense and security are critical, they are in my view not necessarily considered as long-term goals in the sense that they are expedient in so far as the current security challenges we face are concerned. On the other hand, economic prosperity has a long-lasting impact on the lives of the people, underscoring the importance of our people-to-people ties that demonstrate the depth, strength and resiliency of our relationship.

For example, American companies that have established their businesses in the Philippines for a long time have been deeply embedded in the consciousness of Filipinos over the years, especially in the provinces where people say “Colgate” when referring to toothpaste, or when they describe baby diapers as “Pampers.”

There is absolutely no question that economic prosperity and national security are closely connected. Based on many discussions we’ve had in Washington, we can expect more investments coming into the Philippines in many priority areas that have been identified, especially in clean and sustainable energy. 

This was highlighted during the trip of President Marcos to San Francisco last November for the Asia-Pacific Economic Cooperation summit where he witnessed the signing of the landmark “123 Agreement” that allows the US to share nuclear technology and specialized materials for peaceful uses. President Marcos was impressed at how we were able to negotiate the agreement, saying it would ensure a “more energy secure and green Philippines” with nuclear energy becoming part of the country’s energy mix by 2032.

A positive development towards this end was the signing of an agreement between Manila Electric Company (Meralco) and the Seattle-based Ultra Safe Nuclear Corporation (USNC) – a key participant in the first ever US Presidential Trade and Investment Mission to the Philippines – to conduct a feasibility study for the setting up of micro-modular reactors, particularly in areas that need adequate, stable and affordable electricity. President Marcos lauded the agreement as “a significant step towards exploring clean and sustainable energy options for the Philippines.”

The US really wants to help the Philippines in the clean energy sector, so they are pushing harder for the deployment of small and micro-modular reactors which are perfect for the Philippines because they do not require the construction of big conventional power plants.

A major concern for investors, however, is a stable, reliable and affordable supply of electricity. Unfortunately, many areas in the country that are serviced by electric cooperatives (ECs) continue to suffer from frequent power interruptions, making it difficult to attract investments, much less sustain economic growth.

According to a Philippine Institute for Development Studies discussion paper by Kris Francisco and Michael Abrigo titled “Electricity Supply Interruptions and Its Impact on Local Economies” that utilized data sourced from the Energy Regulatory Commission (ERC) on the monthly interruption report of electric cooperatives covering 2009 to 2022, local governments lose around P10.7 billion from “a single electricity supply interruption experienced by ECs, in a span of five years.” In addition, an electricity supply interruption deprives the community of about P3.8 billion worth of undelivered public services related to community development as well as labor and employment over a five-year period.

Worse, many of these electric cooperatives were found to have been systematically overcharging customers in poor communities over the years. These erring ECs have been blatantly disregarding ERC regulations, charging higher electricity rates without basis or standard – creating a huge economic impact on these areas because progress is hampered, with residents and local businesses burdened by high rates compounded by poor service.

No surprise therefore that there is a strong clamor not only from residents but local government officials to improve power distribution by allowing Meralco – the largest private sector electric distribution utility company in the Philippines – to service their area, among them Nasugbu in the province of Batangas that has so much development potential. Meralco’s franchise covers Metro Manila and nearby areas such as certain parts of the Southern Tagalog Region that are considered to be among the most productive, representing over 50 percent of our GDP.

As I have pointed out on several occasions, energy security is an important component in fueling growth and development that would help the country achieve economic prosperity – which in turn would become a strong foundation for national security.

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