Chipmakers join opposition to EPIRA change

Big companies producing microchips, computer parts and other electronics products in the country have joined the mounting opposition to a proposed amendment in the Electric Power Industry Reform Act (EPIRA) of 2001.

Their stand is contained in a position paper they sent to the House committee on energy, which has endorsed the proposed amendment that would allow the state-owned National Power Corp. (Napocor) to keep 50 percent control of the power industry.

Under EPIRA, the government should have sold at least 70 percent of Napocor plants by 2004 so that private investor-buyers could offer consumers the lowest possible price for electricity.

This level of privatization is a requirement for what is called “open access and retail competition,” under which big consumers such as malls and subdivisions could source their power needs directly from whoever producer who gives them the best price, instead of getting their supply from distributors.

However, agencies tasked to sell Napocor plants have failed to achieve 70-percent privatization up to now. At present, less than 35 percent of such plants have been sold.

In their position paper, producers of electronics products, who are a major users of electricity, said they favor “early implementation of open access and retail competition without the disruption associated with amending laws.”

“We believe that the private stakeholders (in the electronics industry) may be amenable to accepting immediate open access and retail competition provided that they would not be faced with the prospect of having to compete with the state-owned NPC (Napocor),” they said.

“The private sector can never compete with a state-owned firm because not only it does have access to the taxpayers’ purse but also because Napocor’s market share exceeds the dominance cap of 30 percent enshrined in the law,” they said.

They pointed out that open access and retail competition can be brought about under the existing EPIRA provided that the sale of Napocor assets is expedited.

They noted that such a sale “has lately been a tremendous success and is gaining momentum.”

Among those who signed the position paper are officials of such large companies as Intel, Texas Instruments, Hitachi, Fujitsu, Toshiba, NEC, Philips, and Samsung.

They said they have been monitoring developments in the power sector since bringing down the cost of electricity is one of their advocacies.

Power cost here is the second highest in Asia after that in Japan, and therefore accounts for a big part of production and business cost, they said.

Meanwhile, former Energy Secretary Vincent S. Perez has expressed concern over the proposed amendments in EPIRA.

“While EPIRA is imperfect, it has served its purpose well in terms of attracting investors to the Philippine power sector. Existing and new industry players are already familiar with its provisions that changing some of these now may rattle the market and upset the privatization momentum.” Perez, who is now chairman of Merritt Partners, a boutique energy advisory firm providing advice to energy companies in Asia.

Perez said government should give the power bill more time before changes are to be done. – With Donnabelle Gatdula