Wednesday, November 21, 2007 Amendments to Epira to affect power industry
THE Philippine Independent Power Producers Association (Pippa) said the decision lowering the privatization threshold to 40 percent from 70 percent will have a “detrimental effect in the industry” as stated under the Electric Power Industry Reform Act (Epira).
In a position paper submitted to the House of Representatives, Pippa stressed that House Bills (HBs) 1889 and 3042 seek to amend the Epira which hasten the open access policy. Open access gives consumers the discretion to choose its own power suppliers.
“However, based on the current industry structure, the government through Napocor (National Power Corporation) and Psalm (Power Sector Assets and Liabilities Management) still control 65 percent of the Luzon grid and 82 percent of the Visayas grid. Thus, government is still dominant and breaches the 30 percent market share cap as stated in Epira,” the position paper read.
“The market share caps of 30 percent for the grid and 25 percent of the national installed generating capacity ensure that there will be enough players to compete in the market. Such a set-up induces competition which in turn, will lead to better prices and services for the consumers,” Pippa added.
Pippa is an organization of privately-owned local and foreign independent power producers (IPPs). It has 26 members and its membership is expected to increase as more Napocor plants are privatized.
The House committee on energy headed by Pampanga second district Representative Juan Miguel “Mikey” Arroyo has been conducting hearings to verify if such an amendment will hasten competition and entice more investors to come in.
Given the complexity of the power industry and the reforms that are being undertaken, industry experts move that an in-depth studies and numerous public hearings are needed to see whether there is a need to amend the Epira or simply let the Joint Congressional Power Committee (JCPC) iron out the kinks in the implementation of the Epira.
So far, Pippa said privatization efforts of the government through Psalm have been successful. In fact, the valuation of old Napocor assets has increased tremendously from US$0.39 million per megawatt (MW) for a small hydro to US$1.55 million/MW for the 600-MW Masinloc coal plant.
As such, Pippa noted that amending the Epira would reverse the successes the industry had patiently strived for and endangers the momentum in the implementation of these reforms. Thus, amendments would only be counter-productive. (MSN/Sunnex)
