MANILA, Philippines - With a looming energy crisis next year, President Benigno Aquino III admitted on Friday that the power sector's business model needs to be changed.
In a speech during the closing ceremony of the 40th Philippine Business Conference and Expo, Aquino described the country's power sector as a "unique industry" with a setup which is "not an ideal situation."
"For instance, even before groundbreaking, plants have typically sold all of their output. I know of no other business or industry that has already sold its goods, that have yet to be produced in a facility that has yet to be constructed," Aquino said.
"Just-in-time supplies of energy do not engender more investments. Therefore, there is a need to change the business model, and that is also a work in progress," he added.
Aquino assured business leaders that the efforts to reform the power industry and the formulation of an integrated and sustainable energy and power development are ongoing.
But the President also urged them to invest in the energy sector, even without long term power purchase agreements or power supply contracts.
"These kinds of plants are what our Department of Energy (DOE) calls merchant power producers; and we hope that more investors will follow suit and will seek ways and means to encourage more in following their track," Aquino said.
Energy Secretary Carlos Jericho Petilla warned of rotating blackouts lasting for one to three hours in Luzon next summer if the government fails to contract additional capacity.
Aquino had requested Congress to immediately pass a joint resolution that will grant him emergency powers to address the looming energy shortage.
The resolution will authorize him to establish additional generating capacity.
He said the DOE is expecting a "critical electricity situation" in the summer of 2015 due to the expected effects of the El Niño phenomenon as well as delays in the start of operation of "committed power projects," among other factors.
"There is no gain saying that the imminent electric power shortage during these months is a real threat to the country’s growing economy and the general welfare of the people," Aquino said in a letter to Congress dated Sept. 12.