* Brownouts may hit Luzon in 2015
* Govt seeks extra 600 MW supply
* Power deficit to push rates up
* Aquino 'emergency powers' opposed
By Erik dela Cruz
MANILA, Sept 2 The Philippines government may be
forced to declare emergency powers to tackle a looming
electricity shortage from 2015 as private firms struggle to
build new capacity, but faces opposition from business groups
worried about higher costs.
Energy Secretary Carlos Jericho Petilla is pushing for the
powers to be introduced this month, giving the government a role
in the broader electricity market for the first time since the
industry was privatised in 2001. The move would allow the
government to directly finance new generation capacity.
One of the fastest-growing economies in Southeast Asia,
Petilla has warned the Philippines faces rolling brownouts next
year on the main Luzon Island, home to the country's
manufacturing and booming call centre industries, as well as
more than half of its 100 million people.
Some 16,400 megawatts (MW) of new supply is planned in the
country over the next five years, but some projects have been
held up by environmental opposition to coal-fired stations,
while others are waiting for customers to commit to long-term
"We've tried to push for energy conservation but we simply
cannot conserve enough if our population is also growing by
about almost 2 percent a year," Petilla said last month.
The Philippines needs an additional 600 MW before March next
year, about the capacity of a mid-size power plant, according to
the Department of Energy, and faces even greater problems
further out as new projects meet repeated delays.
However, government involvement in the industry is opposed
by some advocacy and business groups with memories of a surge in
power prices in the 1990s when former President Fidel Ramos
tackled a power crisis by fast-tracking a raft of expensive
"We are facing a very serious issue, but we don't think
emergency presidential powers are necessary at this point," said
Donald Dee, honorary chairman and chief operating officer of the
Philippine Chamber of Commerce and Industry (PCCI).
The Philippines already pays the second-highest electricity
rates in Asia after Japan, a state agency said last year, citing
an industry survey.
"Short-term measures to buy generation capacity are super
expensive and will drive the price of power further up," the
European Chamber of Commerce said in a recent statement.
President Benigno Aquino, who is four years into a six-year
term, has so far held off on seeking emergency powers from
Congress, asking Petilla to tackle the supply issue first with
legislators, regulators, and power producers.
"We want to be completely ready so that we can avoid
paralysis if the worst-case scenario arises," Aquino said.
Petilla has said the government must decide this month in
order to have time to build extra capacity before brownouts
begin in March next year.
The 2001 Electric Power Industry Reform Act banned the
government from putting up power plants, which have been mostly
privatised over the past 13 years.
Emergency powers would allow it to finance power generation
and subsidize consumers, speed up the issuance of permits for
new projects, and enter into negotiated deals for the repair and
maintenance of plants, bypassing the normal bidding process.
Petilla has said the government, for example, could lease
natural gas-fired facilities owned by First Gen Corp
to produce 100 MW of power at a cost of $20 million a year. It
could also enter into a deal for the immediate repair of a 300
MW unit at the Malaya thermal plant in Rizal, east of Manila.
Business and labour groups, however, have urged the
government to come up with a broad strategy that tackles the
immediate shortage next year and also addresses longer-term
structural problems for the industry.
In the short-term, they say the government could urge
businesses such as mall operators, hotels and factories with
large diesel-fed back-up generators to use these during peak
periods, perhaps selling their excess supply to the grid.
"You don't need emergency powers for that," said PCCI's Dee,
who estimated the plan could produce an additional 1,500 MW of
capacity. "There must be a guarantee of compensation from the
government because the gensets will run on diesel," he said.
The government could also wring bigger savings from energy
conservation, according to the European Chamber of Commerce of
the Philippines, although compliance may be an issue.
Any new measures, however, are still expected to push up
costs. Petilla has said the government will shoulder part of any
expenses, but some will have to be passed on to consumers.
Manuel Pangilinan, chairman of Manila Electric Co (Meralco)
, the country's biggest power utility, said tight power
supply and alternatives such as using diesel generators will
push electricity rates higher.
"Will the emergency powers produce supply in the next 9 to
10 months? If that's the goal, so be it. So you'll have power,
except the rates will be higher," he told Reuters.
(Editing by Richard Pullin)