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This is
the basic premise behind the so-called independent power producers,
behind the concept of take or pay (pay for it whether you use it or
not), and the idea behind the so-called EPIRA (Electric Power
Industry Reform Act of 2001).
You allow yourself to be abused by the
electricity people—the same people behind the IPPs, behind the
take or pay schemes, and behind the EPIRA.
Actually, the premise should be the same as that
for rice—if there is no rice, don’t pay any price for it. Tell
the government to produce the rice or you will oust that sitting
government. How come this principle is not applied to electricity
when electricity is as basic to decent human living as is rice? In
fact, you can go on without rice but not without electricity. With
electricity, you can produce rice. With rice, you cannot produce
electricity.
The government runs after people who hoard and
overprice rice. Should not the government run after people who hoard
and overprice electricity? Simple logic, di ba?
If you believe Department of Energy figures,
there is a serious shortage of electricity, especially in the
Visayas and Mindanao where the local economy has been growing at
double the rate of growth in Metro Manila.
To cover up the deficit, more power plants must
be established. For more power plants to go on stream, you need
investors. To entice investors, the profits from electricity must be
high enough to be worth their while. After all, high cost
electricity is far better than having no electricity at all.
With the economy the strongest in 30 years,
demand for electricity has been greater now than anytime in the
past.
The Department of Energy forecasts peak demand
for electricity to increase by 4.8 percent yearly, from 8,760
megawatts in 2005 to 14,401 MW in 2014.
Some 3,143 megawatts must be installed between
2006 and 2014—1,640 MW in Luzon, 728 in the Visayas, and 775 MW in
Mindanao.
If committed projects are not put in place,
supply shortages are expected in Visayas by 2008 and Mindanao by
2009.
The rule of thumb is each 1,000 MW of shortage
is the equivalent of one hour of brownout daily. A 3,000-MW shortage
could mean three hours of brownouts daily.
Three hours of brownouts daily will nearly
cripple industries and commercial establishments, especially for
those for whom power is crucial—like glass and cement plants whose
machines cannot endure downtimes, and service institutions like
hospitals.
In the last five years, only 2,430 MW of power
was added to the country’s electricity supply. If 2,400 MW
required five years to install, then 3,000 MW will require at least
six years to put on stream.
That is assuming everything is in order and
government people will “minimize their greed”.
Power outlook
Philippine per capita consumption of electricity
(55 GWH in thousands) is low compared to other emerging Asian
economies, such as Malaysia (84), China (940), and Thailand (135).
Even Indonesia has a higher per capita electricity consumption (118)
as well as Pakistan (84).
The growth of the economy has led to a
significant increase in demand for electricity over the past 10
years.
Peak power demand during 2000 to 2006 increased
at a compounded average growth rate (CAGR) of 3.5 percent, with peak
demand rising from approximately 7,138 megawatts (mw) in 2000 to
about 8,760 MW in 2006.
As of December 31, 2006, the total installed
capacity of the Philippine power industry amounted to 15,803 MW. A
total of 56,784 GWh of electricity was generated in 2006.
The economy, measured in terms of real gross
domestic product (GDP), grew at a CAGR of 4.6 percent from P973
billion in 2000 to P1,274 billion in 2006.
The Philippines’ required capacity is expected
to increase from 11,291 MW in 2006 to 16,435 MW by 2014,
representing a 2006 to 2014 a 4.8 percent average annual growth.
Between 2000 and 2005, the Philippines’ total
electricity generation capacity increased at a CAGR of 4.5 percent,
from 13,185 MW in 2000 to 15,619 MW in 2005.
The privatization of the power industry under
the Electric Power Industry Reform Act (EPIRA) of 2001 was supposed
to stabilize both the country’s power supply—which has failed to
meet demand—and power rates, which had become the highest in Asia,
outside Japan.
The EPIRA would have effectively ended the
government’s participation in the power industry, which had been
blamed for the historical problems in power supply and price.
The EPIRA had aimed to improve the power sector
in the Philippines by ensuring and accelerating total
electrification of the country and providing a fairer and
competitive landscape for power sector participants, resulting in a
more efficient and transparent industry.
Unhappily, things didn’t happen that way.
EPIRA has become an albatross on the people.
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