July 12, 2016 8:35 pm
Most people know that
there is widespread concern over the adequacy of the Philippines’ electricity
generation capacity to meet the country’s present and future needs. Mindanao
clearly suffers from power shortage; a more complex situation exists in Luzon
and to some degree also in the Visayas.
Electricity consumption
in the country is about 692kWh/capita per year. This is very low by world
standards. Singapore consumes 8,840, Thailand 2,471, Malaysia 4,512 and Vietnam
1,306kWh/capita. Indonesia uses 788kWh/capita and China 3,762kWh.
Low level of energy
production is not really the main reason for the low level of energy
consumption. The real reason is the combination of low level of industrialization
and affordability. Additionally, the Philippines, like Indonesia, is an
archipelago with many parts of which remain unconnected.
About affordability, or
the cost of electricity vs average salary, electricity price in the country is
the most expensive in the world after Cambodia.
Industrialization in
the country is relatively low; therefore industrial demand for electricity is
also low.
Installed generation
capacity is now about 16,000MW, and an additional 5,000MW is planned for by
2020. Considering the number of times brown outs occur and the demand arising
from the GDP growth, the projected production growth is not adequate. The
country needs more, at least an additional 5,000 MW. But if the GDP growth does
not translate into more and better jobs, and there is no massive utilization of
robotic production methods, any significant demand for more electricity is
unlikely to occur. To imagine that greater generation capacity will ensure
greater reliability is also at least partially flawed thinking. The reliability
issues revolve mainly around the advanced age of many power plants,
transmission and distribution problems, animals knocking down transmission
poles, typhoons, people stealing bits of wire and simple lack of maintenance.
More generation could compound the transmission problems by overloading lines.
Then there is the affordability issue—more demand for power production will
attract more investors. Although operational costs is an important element in
investor evaluation it is only one of many considerations including Rule of
Law, political stability, corruption, the education system and a whole raft of
other factors.
More unreliable
electric power at current cost levels is not going to do anything to attract
investors; and if there is too much generation capacity, then the cost of
electricity will go up.
Electricity in the
Philippines is just another example of poor provision at outrageous cost. It is
a politicized power play. It should not be politicized; it should be left in
good and capable hands. To my mind, as a basic infrastructure power generation
should be operated and power supply provided on a transparent nationalized
basis as it is in Vietnam, Malaysia, Indonesia, Singapore and Thailand and most
other countries, but then it seems very difficult to shift the disastrous
EPIRA.
Getting the electric
power sector sorted out is a major task. Efficiency has to improve, costs have
to be reduced considerably and, most importantly, the key players in the sector
need solid understanding of how it all works—it really is a very complex area.
Efficiency improvement
is of critical importance on the road to advanced economy status. Of course the
efficiency of electricity delivery is but one of many improvements that need to
be worked on. There is the traffic, the bureaucracy, transparency, corruption,
the Rule of Law and, above all, the politicization of every facet of life and
business. There seems to be a widely held perception that if something needs
sorting out you need to talk to a politician to get things put right. But that
is to go too high up the tree. I have recently been watching Parliament TV—live
video recordings of the way government works in the UK. It really fascinated me
to watch proceedings in the Houses of Commons—watching politicians asking
questions, making statements on matters of national importance. But that is
where it stays, the politicians are briefed by the executive departments as
well as anybody else they may choose to summon, which equips them to fight
their corner in political debate after which instructions following the result
of debate with the opposition and the House and voting come back to the
executive for implementation. While people have access to their elected
representatives, there would not be a general expectation that taking an issue
to them would quickly resolve things, nor would it be expected that executive
actions have any political spin on them. Of course, to arrive at a balanced and
democratic political decision you do need a healthy opposition, which even in
the UK these days looks in disarray.
In order to improve
efficiency therefore it is necessary to have a professional and knowledgeable
executive that is divorced from political interests. There does not seem to be
much of a gap between politics and the executive in the Philippines, no doubt
compounded by the vast number of political appointments and consequent “debts”
within executive departments. It’s a good way to maintain control but not
designed to guarantee efficient government service delivery or even an
objective statement as to how things really are.
At lower levels of
government, in the LGUs political influence is very powerful and the holding of
approval authority by individual politicians is often seen as a very valuable
“tool” albeit the elected representative may know little or nothing about the
issue at hand. It is clear that such tools must only be used and be seen to be
used in a non partisan way to the benefit of the citizens in order for
decisions to be more predictable and based on clear and transparent rationale
which can be understood even by those who disagree or may be disadvantaged by
it.
With greater
professional and objective expertise free from any suggestion of political
tampering comes greater predictability and efficiency, more investment and
importantly more decent jobs.
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