By Myrna Velasco
September 17, 2013
As one of the top concerns raised against influx of foreign direct investments (FDIs), the Philippine government is being pressed for solutions on the widely-perceived expensive electricity rates and the looming power supply shortfalls in the Luzon grid.
Michael Rodriguez, Managing Director and head of Macquarie Infrastructure and Real Assets, said “there’s still a clear case for continuing dialogue in the power sector….up to these days, there are still inefficiencies in the sector.”
The country’s higher electricity rates and threats of extremely thinning supply are worrying investors that they want focused attention from government on solving these dilemmas.
Ayala Corporation Chairman Jaime Augusto Zobel de Ayala sounded off that the government must be ready on infrastructure support for the country’s growing economy, since with it “comes many interesting things and new opportunities for investments.”
At the annual Philippine Economic Briefing, Energy Secretary Carlos Jericho Petilla noted that they have been seeing glimmer of hope as to making the country’s rates more affordable and competitive for anticipated entry of investments.
He stressed that the new entrant coal plants, like the 600-megawatt GN Power facility in Bataan had so far exhibited lower price compared to existing generation facilities which were covered by supply contracts under the independent power producer (IPP) regime.
The generation rate of that coal plant, he said, is at P4.00 per kilowatt-hour (kWh) – but he just made simple comparison to the Panay thermal plant in Visayas, of which tariff has been set at P6.88 per kWh.
From that, extrapolations were set that the entry of coal plants could be one way to bring down power rates in the country.
Petilla said “the newer plants that are coming are coal plants … we have a way of lowering power rates in the country.” That in his view, plus the proposed “tightening of contracts” between the power generators and distribution utilities would be the government’s bet on easing electricity prices in the future.
What the energy chief missed in that explanation, however, is the diversity of technology deployments that might be serving the electricity requirements of various grids. Supply contracts also are negotiations between parties without necessary intervention from the State. source
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