Energy outlook in Philippines stable, says Moody’s

By Danessa O, Rivera (The Philippine Star) | Updated December 8, 2015 - 12:00am

http://www.philstar.com/business/2015/12/08/1530171/energy-outlook-philippines-stable-says-moodys

MANILA, Philippines - The Philippines is among the nine countries in Asia Pacific given a stable outlook for their respective power industries over the next 12 to 18 months due to steady demand and consistent tariff mechanisms, debt watcher Moody’s Investors Service said.

The stable outlook for the power sector reflects those of Australia, China, Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand, Moody’s said in its latest outlook for power utilities in Asia Pacific.

Moody’s said the stable outlooks are mainly underpinned by steady demand for electricity in most of the countries, and low input costs under stable market structures, most power companies’ strong to adequate funding capacity and strong government support for state-owned power utilities.

For the Philippines in particular, the key driver for the stable outlook is its manageable competition levels and lack of major constraints on fuel supply.

Moody’s said these countries are expected to record steady sales volumes over the next 12 to 18 months because their developing economies, albeit slower, will support demand for electricity.

“Despite soft macroeconomic conditions, stable or positive outlooks for China, India, Indonesia, Malaysia, New Zealand, Korea and the Philippines mean that the governments’ ability to support their state-owned power utilities, if and when needed, will not weaken materially over the next 12-18 months,” it said.

Moody’s also highlighted the importance of the state-owned power companies in China, India, Indonesia, Malaysia, Korea, Singapore and the Philippines, whose credit profiles will continue to benefit from strong government support.

“The state-owned power utilities in China, India, Indonesia, Malaysia, Korea, Singapore and the Philippines will maintain their strategically important positions as dominant/monopolistic utilities and/or implementers of mandated policies over at least the outlook period,” Moody’s said.

“As such, we believe the respective governments will provide timely support to the utilities, if their viability is at risk,” it added.

Meanwhile, the implementation of transparent and consistent tariff systems, as well as strengthening of the power companies’ financial buffers could change the debt watcher’s outlook from stable to positive.