Where are we really?

Economists are telling us that the Philippine economy is doing very well.  This must be true as many of our eminent economists are one in saying that this is so. I am not an economist, but like many out there, it is not easy to equate a bullish economy with a faltering peso.  The Philippine peso is the worst performing currency in the Asian region and it is not only because of the stronger US dollar.  Our peso is consistently getting weaker against other currencies as well and I have taken to monitoring the currencies more often than I used to do before. I remember that during the Asian crisis, the Philippine peso hit bottom at P56 to a US dollar, and we seem to be getting there slowly.  The economists, though, say that the present value of our local currency should not be the gauge of how our economy is doing.  The brighter side of this is felt by the export industry which is one sector that gets hit hard when the peso appreciates because the value of the products we export abroad has diminished in value.  The other brighter side, of course, is how our overseas Filipino workers are benefitting from it.  Their remittances have much greater value now than, say, a few years back when the exchange was at P42 to one US dollar. 

However, the inflation that we are experienciing cannot be taken lightly. It is felt by the man on the street and even by middle class families as prices of basic commodities continue to rise almost on a weekly basis. As employers, we need to take the plight of our workers into consideration, but radical across-the-board wage increases is not the only solution.  We have small enterprises that simply cannot absorb these across-the-board increases and will only fold up if radical wage increases are mandated. There are just too many factors to consider and certainly, adding more paid holidays to our already kilometric list of public holidays is not the answer.  A few years back, we adopted a five-day work schedule at the office and I found it as a win-win situation for both sides.  Employees do not have to commute six days a week, thus saving on transportation money.  They also have more time for personal rest and get to spend more time with the family, allowing them to plan weekend trips.  The company saves on power costs when you cut one day a week, which constitutes a big chunk of operating costs for small enterprises.

What is the situation of the country’s power sector?  Our power supply has always been touch-and-go for several administrations already and there is a perennial need to bolster the supply. Our power reserves are always thin, and now the Department of Energy is targeting to add at least 10,000 megawatts to our reserves in the next three years.  The DOE is confident that we can attain this, but with a peaking economy, demand is also expected to peak accordingly. As our GDP grows, the demand grows with it.  Interestingly, it is Mindanao that is projected to have the highest annual average growth at eight percent, followed by the Visayas region at seven percent and Luzon at five percent.  Most of our committed power plants use coal and it is unrealistic at this point to think that we can get away from coal-fired plants in the near future. The United States and China, though speaking negatively about coal dependency, have forked tongues because they have the highest number of actively-used coal plants.

Of course, we have a natural gas facility in Luzon that can bolster our power supply and add another 650 MW and a solar facility in this region as well that can add almost 100 MW. Interestingly, it is the renewable energy plants that are expected to contribute the most as they can produce up to 1,559 MW against coal’s generating capacity of 8,049 MW. Power generation in the country continues to rise with renewable energy’s generating capacity steadily rising since 2016, and this is good news for business.

The franchise for the Malampaya Deepwater Gas-to-Power project in offshore Palawan will expire in less than six years from now and we should be ready for it.  Before the 2024 expiration, the government is working on incentives for power companies who may be interested to participate in our bid to build an integrated natural gas facility.  There are 11 power corporations from Japan, China and other foreign firms as well as our Philippine National Oil Co. (PNOC) and First Gen Corp. that have expressed interest in this project at this point in time, but we will never know until D-Day comes how many are seriously interested and how many of these have the capacity. An interesting development here is the Department of Energy’s suggestion with regards to a bill to be filed by Sen. Sherwin Gatchalian about the incentives for companies seeking to be part of the integrated natural gas facility.  A DOE official suggested that, in case of a failed bid, the government must be ready to take over, and this provision should be included in Sen. Gatchalian’s bill. Is that how confident we are?

Mabuhay!!!  Be proud to be a Filipino. 

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