DoE mulls over power perks extension

By: Amy R. Remo
Philippine Daily Inquirer
11:35 pm | Friday, November 11th, 2011


The Department of Energy (DoE) is studying the possibility of extending the special discounted power rate being offered to ecozone locators, given the possible impact on the competitiveness of the local industrial sector once the perks are terminated this December.
“The DoE wishes to inform the public that it is currently studying the possible scenarios that may be adapted in view of the termination of the Ecozone Rate Program as stated in the memorandum of agreement (MOA), and this includes the possibility of extending the special rate for ecozone locators or an extension under different terms and reference,” said Energy Secretary Jose Rene D. Almendras.
Through the “Ecozone Rate Program” (ERP), industries or ecozone locators accredited by the Philippine Economic Zone Authority (PEZA) are given power rate discounts. But these discounts will end once the transition supply contract between Meralco [Manila Electric Co.] and Napocor [National Power Corp.] lapses on December 25 this year.
Also, the DoE has begun consulting with the economic cluster of the Cabinet for the best possible solution to this issue, Almendras said. Any decision will be subject for approval by the financial institutions of the government.
Even Emmanuel R. Ledesma Jr., president and CEO of the state-owned Power Sector Assets and Liabilities Management Corp. (PSALM), admitted that the termination of the discounted rates by December this year would not be just about energy.
In a separate interview with reporters, Ledesma explained that this would have an impact on local industries in terms of competitiveness with neighboring countries, as well as the overall attractiveness of the country as an investment site.
However, Ledesma stressed that Napocor, through PSALM, could no longer afford to extend the discounted rates for ecozone locators. Also, the state power firm no longer has the capacity to provide the electricity requirements, following the divestment of most government-owned facilities.
“Given our mandate to liquidate existing government obligations, it is no longer a sound management decision for PSALM to renew the Meralco transition supply contract and continue to subsidize the economic zones at the discounted rates previously granted to them by Napocor,” Ledesma said. “PSALM will incur operational losses in the event of such renewal since the remaining PSALM-owned power plants in Luzon have high operating costs of generating power. PSALM’s existing capacity may not even be sufficient to supply the economic zones’ power requirements as most of the plants in Luzon have already been privatized.”
Earlier this year, power distributor Meralco, PEZA and members of the Semiconductor and Electronics Industries in the Philippines Inc. wrote separate letters to the government-owned Napocor requesting an extension of the discounts at the economic zones up to December 2012. The ERP is said to benefit 279 Meralco customers in industrial areas, which contribute 43 percent of all Philippine manufacturing exports, or roughly $19 billion.