Foreign chambers want proper implementation of EPIRA

MANILA, Philippines - Major business groups in the country have urged the government to stop any move to amend the Electric Power Industry Reform Act (EPIRA) and instead ensure its proper implementation to solve the country’s power woes.

In a position paper published in The STAR, the Joint Chambers of Commerce of the Philippines (JCCP) said “EPIRA is not the problem, failure to implement it properly is.”

The foreign business groups said changing the rules in the middle of the game would send wrong signals to investors.

“If EPIRA is sent back to Congress for review, the uncertainty it will introduce into the regulatory regime of the power industry will lead to a potentially chaotic system, and worryingly put our future needs at risk at a time when our supply of power is marginal,” it said.

“Brownouts will be inevitable if we don’t build new power plants. International and local investors and financial institutions won’t invest in an industry where the rules are not known and stable,” it added.

The JCCP urged the government to pursue dialogues with industry participants.

The group cited recent changes in the Wholesale Electricity Spot Market (WESM) prices, which they said were still unclear.

“There were also changes in the rules, such as imposing a cap (50 percent) on the level of output that a Retail Electricity Supplier can source from its affiliated power generators, and how to count maximum installed generation capacity, which now includes power controlled by RES and results in double counting,” the group said.

Energy Secretary Carlos Jericho Petilla is pushing for the passage of a bill that will facilitate the processing of vital energy projects, but did not categorically say if he supports moves to review the EPIRA.

“I only have one major bill that wasn’t passed and that is for the fast-track processing of various permits for energy projects deemed as of vital national interest,” Petilla said in a text message to The STAR.

The JCCP also called on the Department of Energy (DOE) to meet with stakeholders to discuss power-related issues such as limits on open access, the fiscal independence of Energy Regulatory Commission (ERC), a review of the WESM price cap, how to better monitor and evaluate grid operations and review the performance of electric cooperatives, including the merits of demand side bidding in WESM and revisions to WESM rules.

The group said there should also be discussions on the fate of Malaya plant, privatization of power plants and review of Transmission Development Plan and taxes on the industry.

“This meeting should include reviewing the role of each entity involved in the power sector, whether it should retain the responsibilities it now has, whether these should be strengthened, or amended or transferred elsewhere,” the group added.

The foreign chambers also urged the government to declare power plants as critical infrastructure or projects eligible for registration with the Philippine Economic Zone Authority to streamline acquisition of permits and approval from all local and national government agencies.

“We believe urgent attention to these and other issues is called for and we look forward to working together with government towards an improved power sector,” it said.

The JCCP is composed of American Chamber of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc., Korean Chamber of Commerce Philippines, Employers Confederation of the Philippines, European Chamber of Commerce of the Philippines and Management Association of the Philippines.

Distress signal

The Trade Union Congress of the Philippines (TUCP) welcomed the JCCP’s call for a stakeholders’ meeting, saying it is a “distress signal” that the economy is in bad shape because of high power rates.

The TUCP and other labor groups comprising Nagkaisa, however, stressed the need for a presidential task force to draw up a national strategy to make the country’s power supply reliable and power rates affordable.

“It is high time for President Aquino pay special attention to the issue,” said Louie Corral, TUCP executive director.

He said the country has the highest electricity rates in Asia that 11 percent to 15 percent of workers’ take home pay goes to the cost of electricity alone.

“Without a serious and practical national strategy on power, workers and their families will continue to spend more for electricity than food, tuition fees, and medicine,” he said.

“Without a stable supply and a very uncompetitive electricity prices, we will not be attractive to much needed jobs-creating foreign and domestic investments. That means, there will be no new jobs and existing companies will resort to reduce employees because of high cost of operation due to high cost of electricity,” he added.

He warned that unemployment and underemployment would rise to an estimated 14.3 million to 14.7 million by the time Aquino steps down in June 2016 if the power problem would not be resolved.

The Labor Force Survey released by the Philippine Statistics Authority in March 2014 showed that the country’s unemployed numbered 2.9 million (7.5 percent) and underemployed 7.1 million.  – With Michelle Zoleta