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Energy supply stability remains a major concern for business groups even as President Aquino had assured them that by 2015 the power supply will become adequate, particularly in Mindanao where daily brownouts are putting industries on edge.

The trade groups expressed concern that the Mindanao power shortage may replicate itself in the entire country.

The European Chamber of Commerce of the Philippines (ECCP) said despite the country’s twin credit ratings upgrade this year, more and bolder efforts need to be done by government to ensure energy supply stability and quality to create a domestic environment truly conducive to job-friendly investments.

The Federation of Philippine Industries (FPI) chairman Jesus Lim Arranza said the government should also take decisive steps in stepping up infrastructure build-up and “do away with conflicting policies that may make prospective, long-term investors hesitate.”

Arranza pointed out that a recurring issue among investors and businessmen are the perceived abuses in the use of the Writ of Kalikasan, a legal remedy under Rule 7 of the Rules of Procedures for Environmental Cases which provides for the protection one’s right to “a balanced and healthful ecology in accord with the rhythm and harmony of nature.”

ECCP said in a recent statement that top focus should be given, for instance, on putting enough power-generation projects on stream this second half of the Aquino presidency to prevent a repeat of the energy crisis that plagued the Philippines in the 1990s.

“Government has to speed up its infrastructure build-up and ensure consistency in business policies to address the perennial worries of the business community, which are the dismal lack of infrastructure like roads and power facilities along with conflicting policies at the national and local levels that are anathema to sustainable high growth,”  ECCP’s vice-president for external affairs Henry Schumacher said.

“The Department of Energy (DoE) must declare a power project at SBFZ (Subic Bay Freeport Zone) as a critical one to helping ensure stable power supply not only at this special economic zone but in the rest of Luzon as well, as a way of assuring prospective locators that their businesses will not suffer in the years ahead crippling outages that undermine productivity and competitiveness,” Schumacher added.

A consortium is putting up an environment-friendly coal-fired plant at the Redondo Peninsula that will generate 600-megawatts (MW), which will be a major step in addressing rising power demand at Freeport and the rest of Luzon.

Schumacher lamented that this important Subic project has hit a snag, though, “amid the misguided opposition by certain groups that have raised false environmental issues despite the fact that this coal-fired facility will be using state-of-the-art technology to generate power that is clean, stable and affordable.”

Government has to consider the importance of addressing the issue of a possible tight power supply in the short- and medium-term rather than pandering to noisy groups disguised as environmentalists, said Schumacher in citing the urgency of speeding up this Subic project.

Based on the DoE’s Power Development Plan for 2012 to 2030, the ECCP said the annual demand growth of 4.8 percent for Luzon means it will need an additional capacity of 10,500 MW until 2030 or 600-MW of power every year starting 2016.

Schumacher said despite the ratings upgrade the country achieved, “investors will not start coming in droves to the SBFZ and other investment havens in the country until such time that they can be assured by the government of adequate and steady power supply to run their businesses 24/7.”

“Malacañang must take crucial steps to make the country a haven for  investments. This can be done through a stable policy environment and more-than-enough infrastructure to cater to investors.”

Schumacher added that in all focus group discussions with industry sectors, power supply stability and quality are raised as major concerns.

Subic Bay Freeport Zone (SBFZ) locator and Eastern Petroleum chairman Fernando Martinez expects electricity demand at the economic zone and elsewhere in the country to even go up at a much higher pace if the recent investment upgrades and the first quarter’s 7.8 percent economic expansion indeed translates into an influx of foreign direct investments (FDIs) into the country leading to greater business activity.

Eastern Petroleum owns a mega gas station at the freeport with its retail network spanning numerous stations across the country including Mindanao.

“There is a need to address the ever-growing need especially here in Metro Manila and Luzon where the demand growth outpaces that of the whole country. We cannot risk having businesses and industries in the area suffer the same fate as those in Mindanao affected when more than 50 percent of the country’s GDP comes from them,” Martinez said.

Martinez said the Luzon-wide blackout last May 8, two days prior to the national elections, had underlined the critical supply level in the metropolis and the country’s main island and the urgency for government to put a premium on expanding its energy infrastructure to ensure long-term power stability, especially in special economic zones like the Subic Freeport where investors are expected to flock to following our investment-status upgrades by Fitch, Standard & Poor’s and the Japan Credit Rating Agency. 

From his experience as an investor, stable and reliable power will spur more industries and spending increasing national consumption including that of fuel.

“At the same time, we want to keep Subic as an investment and tourism hub that will spur more earnings not only for our business but also for other locators and investors,” he added.

Martinez believes that “power generation projects already on stream or still on  the drawing boards should be put on the fast lane”  to augment the current supply of energy in the Luzon grid, especially after the DoE projected that the main island would need  600-MW of new capacity three years from now.

He said the eco-friendly coal-fired power plant of the Redondo Peninsula Energy (RP Energy) consortium at the Subic Bay Freeport could readily address this.

“The government must work in partnership with the private sector to increase capacity in the Luzon grid because this rising demand could even be much higher now that investors are setting their sights on the Philippines. We have been doing this in the petroleum sector where gasoline stations are strategically located to ensure stable supply nationwide.”

Subic Bay Freeport Chamber of Commerce president Danny Piano earlier expressed grave concern over the possibility of the Mindanao power crisis spilling over to Metro Manila and the rest of Luzon if the government fails to accelerate investments in the power sector.

Piano said Luzon could return to the dark days of the 1990s, when 12-hour power outages put people out of work for hours and paralyzed manufacturing and service firms, unless new power generation facilities become operational before 2016.

Arranza, meanwhile, said the government may have difficulty maximizing the benefits of this once-elusive investment-grade status unless it takes decisive steps in putting its energy infrastructure buildup on the fast track and “do away with conflicting policies that may make prospective, long-term investors hesitate.”

The Aquino administration, he said, should “kick-start enough power-generation projects to keep up with the expected surge in demand brought about by the foreseen growth in FDIs. It should look towards treating investors in the power sector as enabling partners because businesses need power, and that more importantly, this should be reliable, sustainable and cost efficient.”

The Luzon grid currently has an installed capacity of 11,739 MW and a dependable capacity of 10,824 MW.

Martinez said the 600-MW Subic power project of RP Energy could readily provide a steady, clean and affordable power to the grid especially to the local business community.  The power plant uses an environment-friendly coal generation technology—the Circulating Fluidized Bed System (CBD)—to produce power while meeting the government’s rigid environmental standards for such projects.

According to Martinez, “we cannot afford to throw away the opportunity presented to us by the successive credit rating upgrades. We need to do everything about one of the basic requirements that long-term investors need badly to do business here, which is a steady supply of reliable and affordable power.”

He also suggested the setting up of an express lane to process the issuance of Environmental Compliance Certificates (ECCs) for all economically-significant projects like power plants.  “Our current power situation is like a self-inflicted crisis resulting from over regulation in power development where every step of the way needs approval even from the lowest official of the land such as barangay captains.”

Source: The Daily Tribune; Front Page; 3 June 2013