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I remember what our friend Mike Toledo submitted when we requested for our entrepreneursâ€™ new yearâ€™s wishes. His wish for the country is that we will no longer be described as merely resilient, but as a Strong People. Strong sense of unity, amidst diversity. I am sure many would agree on the need to have unity amidst diversity, and amidst all the issues and calamities that continue to hit our country.
As we see the outpouring of support to the victims and survivors of the recent natural calamities, we are also seeing another calamity, on power that is, that threatens the cost of electricity in our country. It will definitely affect the way Filipinos live and obviously the cost of living and cost of doing business in the country.
Yesterday, we met DTI Secretary Greg Domingo as we planned for greater public-private partnership in building an entrepreneurial Philippines and empowering the micro SMEs in our country, especially doing more provincial negosyo seminars thru the SME Roving Academy of DTI, and helping strengthen the linkages of SMEs with their markets and to bigger companies as part of the industry clustering strategy. We got his personal view as well on this power crisis as it impacts the industry sector. He believes in the need to review the EPIRA to improve the system in bidding and sourcing of power, as well as the need for greater supply as the economy continues to grow.
We also got to meet recently the top Meralco officials led by Al Panililo, Rain Reyes, Redel Domingo and Dave Buenviaje to better understand the issue and how there can be a lasting solution to this issue. I believe the core problem lies behind the basic supply and demand of power. Our country needs to put up more power generation facilities that will efficiently supply competitively priced power to electricity distributors like Meralco.
Sources say we need 300 more megawatts if we are to meet the growing power demand this year. This translates to new investments needed in power generation. We heard a couple of generation projects are being pursued, but they get bogged down by opposition along the way.
If we look at the cost of electricity in our monthly bills, more than half is attributed to power generation, about 10 percent goes to tax and only about 18 percent accounted for by distribution cost like those incurred by Meralco. Al and Rain have mentioned that the increase does not come from Meralco because they have not increased their rates for several years already. Meralco is a pass-thru; they distribute the electricity that they source from power generators.
At the end of the day, we need to encourage more investments in the power generation side that will ensure a healthy supply of power to Meralco and other distribution companies. A healthy supply means having a buffer that can absorb peaks, scheduled maintenance or unforeseen shutdowns of power generators. There also has to be more transparency in the pricing and bidding for power in the wholesale market.
A number of Go Negosyo entrepreneurs use a lot of power in their businesses. Top tourism entrepreneur/developer Annabella Wisniewski said that the main reason for higher-than-average electricity prices is the failure of the privatization of the power sector via the Electric Power Industry Reform Act (EPIRA) of 2001. The two medium-term solutions are thoughtful but speedy amendment of EPIRA and stronger oversight or regulatory power for the Energy Regulatory Commission (ERC). These reforms may prevent electricity producers from taking advantage of the system, such as manipulating markets, colluding, causing electricity price spikes, or engaging in other questionable behavior. After partial deregulation, California suffered a similar problem during the California Energy Crisis of 2000. The government was able to implement some reforms which reduced market dysfunction.
In the case of Rosalinda Wee, who is in the carageenan business and owns six buildings in the Fort which she leases out to BPO and call centers, she shares our view as she comments. â€œThe reason for high electricity is due to supply and demand. With the economic boom, demand for more electricity cannot be avoided. Government should give more incentives to industry using natural sources such as solar energy. Encourage the private sector to invest more on natural energy by giving tax credits. Competition will lessen electricity cost. Using prepaid card system can also lessen the usage of electricity. We can learn a lot from how other countries manage their electric consumption.â€
Another notable entrepreneur, Alice Eduardo of Sta. Elena Construction and Development Corp. says that the nationâ€™s complex energy problem is a simple matter of demand and supply. There is not enough supply of power to fuel the demand brought about by a growing economy and a rising population. Limited power reserves are seen to lead to volatile power rates. We need to build more power plants–clean energy plants. If we aim to support the rise in construction activity, real estate development, tourism, and manufacturing throughout the country, we need an economic environment that is friendly to investment in the energy sector. Bringing in the huge capital required in the energy sector requires a level playing field that is corruption-free with streamlined processes. President Aquino said it best at the recent groundbreaking of the $600-million natural-gas fired San Gabriel project in Batangas, where he said the goal was not simply to meet demand but to surpass it. The President also emphasized the basic fact that power plants do not happen overnight and that the process takes at least two to three years. So my take is, letâ€™s waste no time.
Natividad Cheng of Uratex said â€œto reduce electricity cost, I am actually in favor of putting up a nuclear plant. If not feasible at the moment, then liberalize power sources by attracting foreign investors to put up more power plants. Also, capitalize on our geothermal resources.â€
Anna Meloto Wilk, Gandang Kalikasan Inc., Human Nature said that the main reason for high electricity charges is inefficiencies in power generation and distribution, corruption and lack of political will. Medium term solution: have a round table discussion for major power generators and Meralco and ask them to review their processes and profit margins to come up with the best rate for the country. Long term, invest in more sustainable sources of electricity that is not tied up with the price of fossil fuels.â€
Cecilio Pedro of Lamoiyan Corp. and jewelry manufacturer Donna Jiao of XC Manufacturing and Trading Enterprise share the view that there should be more transparency and greater spirit of social responsibility for the welfare of the community.
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