PCCI pushes grant of power subsidies

MANILA, Philippines — Apart from pushing for competitive bidding in the power industry, it may be high time for government to explore possible power subsidies to make the country competitive with neighboring countries and to bring in foreign investments, the country’s largest business group said.

The country’s high power cost relative to peer countries remains a big challenge in attracting investments, said Jose Alejandro, Philippine Chamber of Commerce and Industry (PCCI) chairman for energy and infrastructure committee.

“We still have a big challenge in our hands, with all the efforts that have been going on (to bring down power costs by)even 10 percent,” he said in a forum hosted by Stratbase ADR Institute (ADRi) and CitizenWatch Philippines Thursday afternoon.

To lower power tariff, the government should strengthen rules in requiring power companies to undergo competitive bidding or competitive selection process (CSP), PCCI said.

“Real competition that’s public and transparent will bring down the cost. That can easily bring down power costs by 10 or15 percent,” Alejandro said.

The country should also focus on smart grid programs, which will help power distributors improve their system reliability and resilience to natural disasters.

The Department of Energy is currently working on a policy that will promote smart grid development even in rural areas, said Mario Marasigan, director of DOE-Electric Power Industry Management Bureau (EPIMB).

Alejandro said power development should happen more in off-grid areas to spur micro, small and medium enterprises (MSMEs) in rural areas.

While these efforts will help lower the country’s power cost, it will still not be enough to make the Philippines price-competitive against peer countries, Alejandro said.

In his presentation, Marasigan said the Philippine residential power rate remains the highest in the Southeast Asian region.

In terms of commercial power rates, Philippine tariff is the second highest next to Cambodia.

On the other hand, the industrial rate of the Philippines is the third highest in the region, after Cambodia and Singapore.

This is because most peer countries in the region have subsidized power rates, Marasigan said.

Alejandro said there were no new foreign investments in the country, noting that foreign money going around are mostly internal borrowings among countries.

“They are not expanding anymore. They’re all waiting. We have to avoid running away from the issue of subsidizing power costs,” Alejandro said.

Latest Bangko Sentral ng Pilipinas (BSP) data showed foreign direct investments (FDI) rose 9.2 percent to $831 million in June, which brought the year-to-date net inflow to $5.75 billion, up 42.4 percent.

However, the Philippines has lagged behind its Southeast Asian peers in terms of attracting FDIs, the BSP said.