Politics of Electrical Supply in the Philippines

By: Joe Mauricio

Philippines is the only country in Asia that does not subsidize electric companies. Without the government intervention, the power companies can raise the price of power and hold the consumers as hostages. The foreign businesses are not blind to the fact that the power energy industry’s grid network should be upgraded to avoid the regular rolling blackouts in the country. The Aquino administration has to add more capacity in terms of megawatts for twenty years if the country is to win against the looming energy crisis. Many foreign investors are worried by problem concerning power plant capacities, and this might delay commitments from Europeaan investors solicited by President Aquino on his last European trip. When considered that GDP per capita is $2600, electricity prices are clearly prohibitive. In 2012, a factory in the Philippines likely paid more than twice as much for power than factory in Indonesia and Vietnam, and almost twice as much as a factory in Malaysia and Thailand. This scenario will even be more aggravated by more power rate increases in the country. The government should bring down the price of power if the Philippines would like to invite more foreign investors. The Manila Electric Company’s (Meralco) generation charge alone is already higher than the average electricity rate– which includes generation and other charges as well as taxes. Based on data released by research group IBON, residential rates in the United States in 2012 were pegged at 11.88 cents per kilowatt hour compated with the rate in the Philippines at P5.03. The research group also noted Meralco’s generation charge was higher than the residential rate for all customers was P9.64 per kilowatt hour in 2012 was double the U.S. average during the same period. According to IBON, the comparison underscores the extremely high cost of power in the Philippines and the burden that the Filipino electrical consumers and businesses bear. Meralco is blaming generation cost to privatization, deregulation, and full cost recovery under the Electric Power Industry Reform Act of 2001. Privatization and corruption appear to be causing problems in the power industry. Again, the Philippines electrical rates have not only hurt ordinary Filipinos but also serves as among the strongest disincentives against investments in the country. What the country needs is a stronger state that can bust oligarchs collusion and protect the interest of the Filipino consumers and the productive sector of the economy. How about protests against relentless electric rates? Grassroots organizations and consumer groups should launch continuous protests to denounce corruption in government. When it was announced that Meralco aims to implement an electrical rate increase, massive outcry of comsumers is necessary for Aquino government to conduct more investigations. We are against the privatization of the power industry in the Philippines. It derails progressive programs for the economic developments of the country. What’s going on in the Philippines is a classic example of economic liberalization under the auspices of corrupt political system, the absence of much-needed government power subsidy, instead of a handful of oligarchs who privatize profits over nation building and accountability.