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By Euan Paulo C. Añonuevo, Reporter
A GROUP of private power plant operators warned
that consumers are unlikely to reap the benefits of lower
electricity rates if Congress pushes through with amendments to the
Electric Power Industry Reform Act of 2001 (Epira).
Ernesto B. Pantangco, Philippine Independent
Power Producers Association (PIPPA) president, said that amending
the law would effectively redound to government retaining a major
foothold in the sector. This in effect will be detrimental to a
competitive environment that promises to bring down the country’s
exorbitant power rates, which are second to Japan in Asia.
“The sustainable way to achieve reasonable
prices of electricity over the medium term is to foster and enhance
the competitive structure of the electricity industry,” Pantangco
said.
The bill proposing to amend the Epira is under
plenary debate in the Senate. One of the proposals under the bill is
to lower the privatization threshold of state-owned National Power
Corp.’s (Napocor) assets to 50 percent from 70 percent under the
existing law.
Problems in the sale of Napocor’s assets have
been blamed for the delay in the implementation of an open-access
regime, which is expected to inaugurate lower electricity rates
since this would allow end-users to choose their suppliers.
The privatization threshold is the only unmet
requirement for retail competition under Epira.
The government and the private sector are hoping
that as more power generating firms and suppliers compete for
consumers’ electricity needs, the country’s electricity rates
would go down.
Already in its seventh year, the privatization
of Napocor’s assets only gained momentum in the last two years.
Pantangco said that bringing down the
privatization requirement to 50 percent would mean that Napocor and
state-run Power Sector Assets and Liabilities Management Corp.
(Psalm) would remain in control of 41 percent of the Luzon grid and
38 percent of the Visayas grid. And since Napocor and PSALM are
state-owned enterprises, they enjoy government subsidies, funding at
government concessional interest rates, debt condonation and other
perks.
“Under such scenario in which the playing
field is heavily tilted in favor of Napocor and PSALM from the
beginning, how could members of PIPPA be expected to compete?”
Pantangco said.
Besides undermining the competitiveness of the
power industry, Pantangco said that lowering the privatization
threshold will serve to slow down the present momentum of the Epira
and perpetuate Napocor and PSALM’s market dominance.
As of May 8, proceeds from the state’s
privatization process, which will be used to pay off Napocor’s
$7-billion debt, have yielded the government $6.66 billion, broken
down as follows: state grid National Transmission Corp. for $3.95
billion; power plants with a combined capacity of 1,855.5 megawatts
for $2.70 billion; and a decommissioned plant for $2.51 million.
“The provision on the privatization threshold
is the most efficacious, if not the only, provision that compels
PSALM and [Napocor] to pursue privatization,” Pantangco said.
Instead of tinkering with the Epira, the group
called on the implementation of the law’s Section 35, which
mandates the reduction of royalties, returns and taxes collected by
the government on indigenous energy resources such as the Malampaya
field.
The said field is the country’s largest
natural gas producer. Run by a consortium led by Shell Petroleum
Exploration B.V., the Malampaya fuels half of giant utility firm
Manila Electric Co.’s electricity needs.
Apart from the removal of the royalties,
Pantangco also pointed to scrapping the value added tax on
electricity.
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