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This is the concluding portion of my interview with
President Arroyo. She talks about bringing down the cost of
electricity.
Q: By next year you will be able
to privatize up to 80 percent of Napocor’s generating capacity,
that means about 4,000 megawatts. But you have done only 400
megawatts. What makes you optimistic that you can do 10 times more?
PGMA: Hopefully, yes (we can), as
long as we’re able to reduce this friction in our privatization.
There are many interested investors. Those (plants) that we thought
would go for a song, we got a very good price—Pantabangan, Magat,
Calaca and Masinloc (power plant), which was criticized so we had to
cancel it. The plants were priced very well in the market.
Pantabangan and Magat were sold for $500 million.
Mirant was sold for $3.5 billion.
The new owners are going to have a $500-million expansion for 400
megawatts. So the total investment is $4 billion. That is the
biggest Japanese investment in our country. Of course, a power plant
is not labor-intensive. But then it brings about lower power rates.
That’s the one that will increase employment.
Q: You still have one of the
highest electricity rates in Asia. How are you doing to bring it
down?
PGMA: I agree with you. I’m
always concerned with the (electricity) prices consumers and the
industrial users pay. That’s why I’m very impatient to move the
privatization of Napocor. For one thing, it will free government
from subsidies, which we could spend on more investments.
And also, it should provide for
more competition and competition will tend to bring down the rates.
In the meantime, we’re working together on other things to address
the cost of electricity. The WESM (Wholesale Electricity Spot
Market) was set up last year to bring about greater competition and
open access.
Q: There’s no competition yet
in (electricity) retail.
PGMA: Yes, that’s right.
Exactly. Last year, Meralco offered to allow its customers choice
even before the 70 percent (privatization minimum of Napocor plants
under Epira). We’re taking them up on it now. Customer choice
means that you don’t have to connect to Meralco. You can connect
to any utility. You pay Meralco only for the transmission. You pay
Meralco for the tolling fee. But then you can already choose which
of the utilities will give you the lower rate. First you start with
one megawatt of consumption but we will lower it to 750 kilowatts.
The other thing is that the
Philippine Economic Zone Authority (PEZA) can now also contract with
other gencos at lower prices within its own economic zones. Also, we
have to accelerate privatization. We have asked PSALM to have a more
business-like attitude rather than a bureaucratic attitude.
PSALM has to review the bidding
documents for privatization because many of the bidding documents
provisions are anti-investor. There are many complaints. Nono
Ibazeta (the new PSALM CEO) is not required to think within the box.
We hope that there will be other bidders for TransCo. We hope that
when the bidding documents are nicer, others will come. We have to
adhere to the rules of international business. Power is what
everybody sees as the need. There’s a market need for
infrastructure to be more competitive. And the most important
infrastructure we need to be more competitive is power
infrastructure.
We don’t really want to have
new taxes. Because many of our increased expenditures are going to
be on capital investments. We really have to have more
privatization.
Q: How come despite of these
achievements, you still get very low ratings in surveys?
PGMA: The credit ratings were
fine. Unfortunately, for the political analysts, they work on old
data and look at the newspapers.
And if you’re gonna look at who
are the ones in the Transparency International Philippines,
they’re made up of opposition people.
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