We can’t produce new jobs with costly electricity

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Ernesto F. Herrera

Ernesto F. Herrera

Regardless of whether it is staggered or delayed or whatever, the fact remains there is no stopping the P4.15 per kilowatt-hour price increase that the Energy Regulatory Commission allowed the Manila Electric Co. to charge its consumers.

For consumers, and especially for businesses, power rates are already too high and the increase would surely take its toll on those companies that are already struggling to operate.

Costlier electricity due to higher generation charges would further drive firms, including those in export-processing zones, to fire more workers. The upward adjustments in rates will definitely have the effect of an extra heavy tax on businesses and households.

Ill timing
The rate increases are counterproductive, and have tremendous potential to inflate the prices of consumer goods and services. They could not have come at a worse time.


How can the country bounce back from and help the victims and survivors of recent natural calamities like Typhoons Yolanda, Labuyo, Maring and Santi, and the earthquake in Bohol if businesses are hampered by costly electricity?

We need new jobs now more than ever, particularly in labor-intensive factories, to accommodate those who have lost their homes and livelihoods in the disaster-stricken areas of the Visayas, and even for homecoming OFWs who lost their jobs in Saudi Arabia (through Saudization), Egypt, Yemen and other troubled host countries.

Luring more investments in manufacturing activities would help the country immensely in counteracting the negative effects of recent natural calamities and lessen our over-reliance on OFW remittances. But the government has to rouse itself from complacency and take more aggressive strides toward making power costs here more affordable.

The cost of electricity here is already the highest in Asia and one of the highest in the world, and in the electronics industry and other manufacturing industries, it accounts for one third of the total cost of production.

It’s a pity because many manufacturing investors in China are looking to relocate to other more suitable countries due to the rapid wage inflation there. How could we be attractive to these investors though with higher power rates?

Higher power rates would make it even more difficult for many firms to cope with the sudden fall in their export sales due to the global economic problems and force them to cut some more on their labor costs.

The higher charges would also weigh down on non-exporting firms already reeling from the decline in domestic consumer spending amid mounting job losses and the unusually harsh economic conditions brought on by natural calamities.

Several power-intensive industries are bound to be hit hard by higher electricity rates like construction, fertilizer, cement, ceramics, steel, petrochemicals, aluminum, pulp and paper, glass, and basic chemicals.

Among export-oriented industries, the power-intensive manufacturing of electronics as well as garments and textiles are extremely vulnerable to higher electricity charges.

Retail trade will likewise suffer, since large shopping malls, supermarkets and restaurants tend to consume a lot of electricity for air-conditioning, lighting and refrigeration.

Actually, even contact centers and other business process outsourcing providers risk being negatively impacted since they operate day and night, seven days a week.

Other industries that consume large amounts of electricity are mining and quarrying; the milling of flour, rice, corn, coconut and sugar; poultry growing; food processing and canning; and even fisheries, which require cold storage.

Power costs are crippling businesses and the scary thing is the strong possibility that they are bound to get higher if the government keeps on simply kicking the can down the road.

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