Power Discount To Locators Renewable

PEZA Insists


Manila Bulletin
By BERNIE CAHILES-MAGKILAT
November 10, 2011, 11:29pm


MANILA, Philippines — The Ecozone Rate Program (ERP), which grants discounted power rate to economic zone locators, should be renewed in light of the deferment in the implementation of the Retail Competition and Open Access (RCOA).


Director-General Lilia B. de Lima of the Philippine Economic Zone Authority (PEZA), has asked Trade and Industry Secretary Gregory L. Domingo, who is also PEZA chairman, to appeal for the intercession of President Aquino in light of the decision of the Power Sector Assets and Liabilities Management Corp. (PSALM) not to extend the ERP, which is due to lapse December 25 this year.


De Lima said in her letter to Domingo that it is their understanding that the memorandum of agreement with the National Power Corp.-MERALCO provides for a one-year extension of the special rate if RCOA is declared/implemented prior to the expiration of the NPC-MERALCO Transition Supply Contract.


The special rate for ecozones was a pact sealed previously between Meralco and NPC (and assigned to PSALM following the company’s privatization). It was meant to help businesses wade through high cost of operations, especially for those in the power-intensive sectors.


“Thus, it is our position that while ecozone locators cannot enjoy yet the benefits under the RCOA regime, the government should continue providing the special power rate in order to support the competitiveness of these export manufacturing enterprises in the world market and prepare them for the full implementation of the RCOA on 26 December 2012, as proposed by the RCOA-Steering Committee,” De Lima said in a letter.


“If the ERP will not be extended, it will definitely increase the cost of electricity which will certainly be a huge disappointment to ecozone locators considering the deferment of the RCOA which allows them to choose their preferred suppliers which can offer them competitive power rates,” De Lima said.


The ERP is benefiting 279 manufacturing ecozone enterprises accounting for 43 percent of the total Philippine manufacturing exports.


In addition, De Lima said, the national competitiveness of the country is also at stake since the Philippines has the most expensive electricity in Asia.


“High power rates are driving away potential investors because electricity costs account for 40-50 percent of exporters’ total operating expenses,” she said.


Potential investors will have reservations in doing business in the country and those that are already here might relocate to other countries such as Vietnam and China.


Earlier, PEZA, MERALCO and the Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI) had appealed to PSALM for at least one-year extension of the lower electricity rates being offered to ecozone-locators.