PH urged to ensure consistency in energy policies

AFP FILE PHOTO

MANILA, Philippines–A global energy expert has stressed the need for the government to ensure consistency in energy policies and to avoid making “political, short-term” changes if it intends to attract more long-term energy investments that could support the continued growth of the Philippine economy.

Daniel Yergin, founder of IHS Cambridge Energy Research Associates and an authority on energy, international politics, and economics, noted that the original reforms in the energy sector, as contained in the Electric Power Industry Reform Act of 2001, were “impressive, intelligent and well thought out.”

“To ensure that you have adequate energy to support economic growth, (it will be important to have) consistency in energy policy and not making changes for short-term gains. Rather, (we should) focus on the long-term because energy investments being made, not just for modernization, are within a 40-50 year time horizon,” Yergin explained.

“You can’t change (policies) back and forth. What you want to do is encourage long-range investments. That will require consistency in policies. Short-term political changes should not be made for that would only raise questions about the credibility of the country’s economic and political systems,” he added.

The Pulitzer Prize-winning Yergin further noted that the Philippine system had “a lot of credibility, which had brought in a lot of investments.” Maintaining that credibility, he stressed, is crucial.

“The markets have changed. The investors have also changed as they have more choices now. They are more careful and more capital disciplined. Thus, consistency and realism are the fundamentals of a wise investment regime for countries around the world and it certainly applies to the Philippines,” Yergin said.

Ray Cunningham, executive director for business development at Aboitiz Power Corp., expressed the same sentiments as Yergin, noting that the country’s Epira, which was passed in June 2001, was a “great, well-written piece of regulation.”

“There are many efforts to change (Epira) and I think (it’s best) to leave it alone. Can you imagine where we would be today if more than 80 percent of the capacity that has been privatized and rehabilitated at the risk of the private sector had not happened? Government-operated plants were in terrible shape then. We would have a crisis probably a few years back had it not been for Epira,” Cunningham said.

“People talk about the failure of Epira to bring prices down but if you look at the prices that Manila Electric Co. (Meralco) has negotiated with the independent power producers (IPPs), they are significantly lower than wholesale cost of power of National Power Corp. before,” he added.

Cunningham said the Philippines had yet to find out the true power of open access and retail competition.

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