Electricity and the politicalization of economic development



Most people know that there is widespread concern over the adequacy of the Philippines’ electricity generation capacity to meet the country’s present and future needs. Mindanao clearly suffers from power shortage; a more complex situation exists in Luzon and to some degree also in the Visayas.

Electricity consumption in the country is about 692kWh/capita per year. This is very low by world standards. Singapore consumes 8,840, Thailand 2,471, Malaysia 4,512 and Vietnam 1,306kWh/capita. Indonesia uses 788kWh/capita and China 3,762kWh.

Low level of energy production is not really the main reason for the low level of energy consumption. The real reason is the combination of low level of industrialization and affordability. Additionally, the Philippines, like Indonesia, is an archipelago with many parts of which remain unconnected.

About affordability, or the cost of electricity vs average salary, electricity price in the country is the most expensive in the world after Cambodia.

Industrialization in the country is relatively low; therefore industrial demand for electricity is also low.

Installed generation capacity is now about 16,000MW, and an additional 5,000MW is planned for by 2020. Considering the number of times brown outs occur and the demand arising from the GDP growth, the projected production growth is not adequate. The country needs more, at least an additional 5,000 MW. But if the GDP growth does not translate into more and better jobs, and there is no massive utilization of robotic production methods, any significant demand for more electricity is unlikely to occur. To imagine that greater generation capacity will ensure greater reliability is also at least partially flawed thinking. The reliability issues revolve mainly around the advanced age of many power plants, transmission and distribution problems, animals knocking down transmission poles, typhoons, people stealing bits of wire and simple lack of maintenance. More generation could compound the transmission problems by overloading lines. Then there is the affordability issue—more demand for power production will attract more investors. Although operational costs is an important element in investor evaluation it is only one of many considerations including Rule of Law, political stability, corruption, the education system and a whole raft of other factors.

More unreliable electric power at current cost levels is not going to do anything to attract investors; and if there is too much generation capacity, then the cost of electricity will go up.

Electricity in the Philippines is just another example of poor provision at outrageous cost. It is a politicized power play. It should not be politicized; it should be left in good and capable hands. To my mind, as a basic infrastructure power generation should be operated and power supply provided on a transparent nationalized basis as it is in Vietnam, Malaysia, Indonesia, Singapore and Thailand and most other countries, but then it seems very difficult to shift the disastrous EPIRA.

Getting the electric power sector sorted out is a major task. Efficiency has to improve, costs have to be reduced considerably and, most importantly, the key players in the sector need solid understanding of how it all works—it really is a very complex area.

Efficiency improvement is of critical importance on the road to advanced economy status. Of course the efficiency of electricity delivery is but one of many improvements that need to be worked on. There is the traffic, the bureaucracy, transparency, corruption, the Rule of Law and, above all, the politicization of every facet of life and business. There seems to be a widely held perception that if something needs sorting out you need to talk to a politician to get things put right. But that is to go too high up the tree. I have recently been watching Parliament TV—live video recordings of the way government works in the UK. It really fascinated me to watch proceedings in the Houses of Commons—watching politicians asking questions, making statements on matters of national importance. But that is where it stays, the politicians are briefed by the executive departments as well as anybody else they may choose to summon, which equips them to fight their corner in political debate after which instructions following the result of debate with the opposition and the House and voting come back to the executive for implementation. While people have access to their elected representatives, there would not be a general expectation that taking an issue to them would quickly resolve things, nor would it be expected that executive actions have any political spin on them. Of course, to arrive at a balanced and democratic political decision you do need a healthy opposition, which even in the UK these days looks in disarray.

In order to improve efficiency therefore it is necessary to have a professional and knowledgeable executive that is divorced from political interests. There does not seem to be much of a gap between politics and the executive in the Philippines, no doubt compounded by the vast number of political appointments and consequent “debts” within executive departments. It’s a good way to maintain control but not designed to guarantee efficient government service delivery or even an objective statement as to how things really are.

At lower levels of government, in the LGUs political influence is very powerful and the holding of approval authority by individual politicians is often seen as a very valuable “tool” albeit the elected representative may know little or nothing about the issue at hand. It is clear that such tools must only be used and be seen to be used in a non partisan way to the benefit of the citizens in order for decisions to be more predictable and based on clear and transparent rationale which can be understood even by those who disagree or may be disadvantaged by it.

With greater professional and objective expertise free from any suggestion of political tampering comes greater predictability and efficiency, more investment and importantly more decent jobs.

Mike can be contacted at mawootton@gmail.com.


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1 Comment

  1. April 22 2016

    CENECO Crew has found the cause of this large power interruption. A steel tower of 69kv line in between two rivers at Vista Alegre was totally down. Said steel pole has already rotten and was only supported by an improvised pole.

    How long does it take for a steel pole to rot ?

    Apparently Ceneco does not make inspections on the equipment.
    The entire management of the board of directors and the GM need to be replaced by a team of professionals that have a plan to provide reliable power.

    The fact is we continue to have blackouts all the time around 12 or more every month and this has been going on for years with Ceneco running around every day fixing what broke that day but never improving their service.

    Expensive and unreliable the same clowns collecting a salary by provide terrible service.