Manila Bulletin
by Myrna Velasco
November 2, 2014
The Philippine energy sector is literally and figuratively having a ‘buffet of problems’ – and these have been giving industry players major headaches.
Now, this is the question begging for an answer: Will the Philippine energy sector be able to compete with its neighboring countries in next year’s much-anticipated ASEAN Economic Community (AEC) regime?
In the power sector, many are anxious rather than optimistic as to the impact of the region’s economic integration.
Nevertheless, in the sector’s other half, primarily the downstream oil sector, they have been seeing silver lining in the harmonization of product standards, primarily for biofuels and even for the market foray of higher quality fuel products – like the Euro IV and eventually Euro V standards.
Unfortunately for the power sector, it failed learning lessons from the worst power crisis it had in the 1990s.
It appears that the brunt of the extreme electricity crisis of 8-10 hour blackouts in the past had not been enough to give policymakers a ‘wake up call’ or whack on the head, so they could have sensibly prepared plans and measures to spare the country for any threatening second round.
Past that, there is also the issue of high electricity rates that could thump us down when it comes to competing with neighbors on the investments milieu.
A study undertaken by the Philippine Independent Power Producers Association, Inc. (PIPPA) pointed out that “while we may be better than most in GDP/kWh (gross domestic product per kilowatt hour) productivity…paying for more power weakens our competitiveness.”
The study outcome of the power industry players has emphasized that “to be at par with the $GDP/$kWh of Malaysia, Thailand and Vietnam, Philippine power rates should be lower by about 20 percent” or a reduction of P1.70 per kWh.
Almost in chorus, players in the energy sector are emphasizing that ‘entering a competitive sphere with ASEAN neighbors’ may have been desirable –- “but that is only if we know how to address our own problems first before we go out in the field to compete.”
Sure, there are feasible laws and policies governing various segments of the industry, but various stakeholders averred “we are terribly failing in enforcements.”
In many instances, investors in the Philippines were shocked with drastic changes or flip-flopping in policies that are being triggered either by ‘political pressures’ and even judicial interventions.
So in the game of cornering fresh capital to add up capacities for the long-term power supply or in pursuing energy security, the country is also manifestly fledgling compared to other member-economies in the region.
It is also regrettable that even if energy concerns are now reaching the top of global development agendas, “significant policy gaps still exist.”
According to Energy Undersecretary Loreta G. Ayson, in many countries, policies focusing on the integration of energy sectors of the Asean region are still at starting point of discussions – including those on planned massive scale investments of liquefied natural gas.
Policies may have been tackled on bits-and-bobs at each sector, but the lacking piece in the puzzle, is collaborative discussions and harmonizing intersecting edicts of various member-countries, she said.
That is the reason ASEAN integration is being proposed as a ‘high point agenda’ in next year’s Asia Pacific Economic Cooperation (APEC) conference to be hosted by the Philippines.
“We are focusing our efforts in expanding green energy sources in the total energy supply, one of which includes the establishment of an expanded natural gas use in different parts of the Philippines,” Ayson said.
She added that as an underpinning policy, the Department of Energy will be “increasing the share of natural gas in the energy mix through intensified investment promotion activities” – with an intent to be competitive and aligned also with the policies being advanced by other ASEAN countries.
And on the long-propounded Trans-Asia Gas Pipeline (TAGP) interconnection, the Philippines is also seen at the end of the line – given its seemingly disjointed and extremely-archipelagic set-up compared to the land-locked configuration of neighbor-countries.
On a more positive note, Energy Undersecretary Zenaida Monsada has asserted that the ASEAN-wide integration could reinforce harmonization of products standards, including on biofuels, which could “widen the market of ASEAN biofuels into other parts of the world, like Europe.”
She added that the Philippine mandate on of Euro IV product introduction at gas pumps by year 2016 will similarly broaden the sourcing or importation options of domestic oil players – hence, prospectively giving them better leverage when it comes to securing the products at competitive prices.
For certain, the region’s much-touted economic success could be something to celebrate about – but such may also bring new challenges – and primarily its “tremendously growing demand for energy shall be set as a powerful argument for urgent, concerted action.”
And that call for collaborative action is now – not tomorrow – when the stakes are already out of hand into the viable solution-finding realm.
For emphasis on the power sector, its chances of becoming competitive will highly depend on how soon it can address its tangled dilemmas on supply, more expensive electricity rates and uncertain policies and regulatory frameworks. Sadly for now, the prospects are not that bright. source
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