(The Philippine Star) | Updated November 1, 2016 - 12:00am
MANILA, Philippines -
The Philippines will continue to lag in global competitiveness unless
government addresses the country’s high power cost – considered among the most
expensive in the world – to support the manufacturing sector, experts said.
Experts at a recent
forum said electricity is the biggest expense for industrial firms, accounting
for about a fourth of total costs.
Federation of Philippine
Industries (FPI) president George Chua said electricity expense, on the
average, accounts for three percent of total production cost incurred by
manufacturing firms and even goes higher for material industries such as
cement, paper products, iron and steel, industrial chemicals, plastic products,
glass products, petroleum refining and rubber products.
A recent study
commissioned by power distribution giant Manila Electric Co. (Meralco) showed
its rate is third highest in the region in 2016, down from second in 2011. Its
tariff is also the fourth highest in Asia-Pacific and 16th worldwide.
This situation is
becoming a tough sell for foreign investors to build industries in the
Philippines compared with neighboring countries such as Indonesia, Thailand and
Malaysia, UP School of Economics professor emeritus Dr. Raul Fabella said.
“Both Filipino-Chinese
tycoons and up-and-coming startups from Taiwan, are either moving out of the
country to put up their factories in China, or giving us a miss for Vietnam or
Thailand, where electricity rates are nearly a third of ours. Electricity in
Thailand costs nearly half that of ours, while that in Indonesia is only a
fifth of ours,” he said.
The flourishing
renewable energy (RE) sector is a welcome development for power-intensive
industries but experts warned its expansion should be done in caution to have a
sustainable long-term solution to the nation’s energy challenges.
Fabella said all
sectors should continue RE development as this will aid in curbing climate
change. “But as with any big initiative, we must proceed with caution and
extensively study the weaknesses of our innovations, lest they come back to
haunt us,” he said.
But too much
development of RE will spell more costs shouldered by consumers under the feed-in
tariff (FIT) scheme.
“The more RE is
utilized in the country’s energy mix, the longer we remain a country with the
most expensive electricity. There are serious economic consequences to that.
Expensive power makes industrialization less than viable. That spells lesser
jobs created and more people poor,” Minimal Government Thinkers Inc. president
Bienvenido Oplas Jr. said.
Chua also said “the
only reason we have investments going into renewable energy is because a tariff
is imposed on all electricity consumers to subsidize alternative power
generation. That tariff raises power costs for everyone.”
In the meantime, the
Philippines – particularly the manufacturing sector – will continue to depend
on coal power for at least five more years, Chua said, as growing businesses
seek cheap electricity.
“Philippine power costs
are very expensive, that hurts our competitiveness in manufacturing,” he said.
“So we really need coal, it’s one of the cheapest sources of power for a
country with one of the highest costs in Asia.”
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