RP needs $7.18b to avoid power crisis

RP needs $7.18b to avoid power crisis

Agence France-Presse, Manila

The Philippines needs 400 billion pesos (US$7.18 billion) over the next 10 years if it is to avoid recurring power shortages, President Gloria Arroyo warned on Friday.

She urged Congress to swiftly pass a proposed law that would complete the privatization of the loss-making state utility National Power Corp. (Napocor), saying this was necessary to bring in the investment in the required power facilities.

In a speech to provincial power distributors, Arroyo said studies had found that the country needed an additional 6,000 megawatts in generating capacity over the next 10 years.

However, she warned that it takes three years just to put up a power plant and "our power industry needs to act now".

"We need 400 billion pesos in order to finance these power plants as well as the supporting transmission and distribution facilities," she said.

To bring in the new investment to make this possible, Arroyo urged Congress to speedily pass a bill that would grant a franchise to the private entity that buys out Napocor's transmission facilities.

Napocor's generating facilities are already scheduled to be privatized under a law passed in 2001, Arroyo said, expressing confidence that state agencies could sell off 70 percent of the assets in the northern and central Philippines by 2005.

Arroyo complained that Napocor had incurred losses of almost 100 billion pesos, which was racking up debts of almost $10 billion.

It had also been inefficient and hit by corruption which had forced the government to subsidize the utility, increasing the budget deficit further and showing the need for its privatization, the president said.

"The first key to privatization is to create an investment climate that is attractive to both foreign and domestic investors," she stated, adding that the privatization process must also be clear and transparent.

The Philippines suffered lengthy daily power outages in the mid-1980s due to the failure to put up enough power generating plants. The issue was only resolved after then-president Fidel Ramos was given emergency powers to sign agreements for more power plants.