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By Euan Paulo C. Añonuevo, Reporter
The global credit crunch is likely to dampen investor interest in
the government’s ongoing power sector privatization drive, an
industry official said.
On the sidelines of the Seventh Management
Association of the Philippines Conference, Federico Lopez, First Gen
Corp. president, said the privatization of state-owned generating
plants are suffering from a “little bit of a hiccup” as capital
remain scarce in light of the global financial crisis.
“No doubt a lot of this global turmoil is sort
of putting a chink on everybody’s plans,” he said.
Because of this, the executive of the
country’s largest power producer said that government should
ensure a level playing field in the industry to keep its
privatization program attractive to investors.
Since the passage of the Electric Power Industry
Reform Act (EPIRA) of 2001, the government managed to dispose the
bulk of state-owned National Power Corp.’s (Napocor) plants only
in the last two years.
The privatization of at least 70 percent of
Napocor’s power plants and the same volume for its contracted
capacity are the last remaining requirements under the EPIRA before
an open-access regime can begin. Under this setup, consumers can
choose their suppliers.
To keep this momentum from faltering, Lopez said
that the government should be in tune with the needs of the industry
such as the need for Napocor to reflect in its pricing the true cost
of electricity.
A number of participants in the power industry
earlier scored Napocor’s “artificially low rates” to which the
rates of transition supply contracts attached to its privatized
power plants assets are indexed.
These contracts are deal sweeteners that give
new owners of Napocor’s plants a ready market for electricity.
These contracts, however, will lapse a year after the implementation
of open access.
Lopez said that Napocor’s power rate today,
which stands at about P3.15 per kilowatt-hour, is lower than the
average of about P4.67 per kilowatt-hour offered by new players in
the industry.
This, he said, may scare off investors at a time
when the country badly needs investments in the power sector.
“It’s very important for the government to
ensure that the industry stays attractive and that they continue to
attract the big players,” he said.
Based on the Department of Energy’s forecasts,
the Luzon grid would face a supply shortage by mid-2011. However,
First Gen’s projections show this may happen by 2010.
The projections for Visayas and Mindanao are
grimmer, with the two grids expected to face supply shortfalls much
earlier than Luzon unless new plants are put up or existing ones
expanded.
Energy department data showed that electricity
consumption last year rose higher than government’s projections.
Based on the 12th Status Report on EPIRA
Implementation, total electricity sales across the country grew 5
percent year-on-year to 48,009 gigawatt-hours.
The bulk demand for electricity last year at
about 60 percent was registered in franchise areas serviced by
private investor owned utilities.
The “accelerated growth” was attributed to
the increasing number of small-scale businesses and call centers.
“Rapid increase was also seen in ‘others’
which include street lightings, public buildings and others not
elsewhere classified” in the commercial sector, wherein demand
posted a 6-percent hike to 13,470 gigawatt-hours.
Of the country’s three main grids, the Visayas
posted the highest growth at 8 percent to 6,017 gigawatt-hours.
This, despite the tight power supply situation in the region, has
resulted in the occurrence of recurring brownouts.
The Mindanao grid, whose power supply and demand
outlook also remains problematic, registered a 6-percent increase in
electricity sales. The Luzon grid’s sales also went up by 4
percent.
Energy Sec. Angelo Reyes earlier said that the
electricity demand in the country is projected to increase at a rate
of 4.4 percent from 2008 to 2017.
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