PCCI warns delayed power deals could dampen growth

THE Philippine Chamber of Commerce and Industry (PCCI) said the long-delayed approval of power supply agreements (PSA) poses risks to the country’s energy security and might hold back economic growth.

In a statement, the country’s largest business organization quoted its director for energy and power, Ramon D. Escueta, as saying: “Delays in the approval process do not only cause setbacks on the development of these power projects — which takes about three to four years to build — but also pose threat on energy security and most importantly retard the nation’s economic growth.”

PCCI raised concerns over the long time it was taking the Energy Regulatory Commission (ERC) to act on PSA applications covering the delivery of power amounting to 4,500 megawatts (MW). It said delays could prejudice additional supply from new baseload power plants.

The ERC regulates and reviews each PSA, a bilateral contract between a power generation company and a distribution utility.

“Stalling power plant development is anti-poor because it jeopardizes the country’s future supply,” PCCI President George T. Barcelon said. “Absence of a stable power supply is actually more expensive for ordinary Filipinos.”

“It has been reported recently that more than 90 PSAs are pending with the ERC,” PCCI said in its statement.

In an earlier interview, the ERC said it could not give a date during which it decide on applications for PSAs, including the seven filed by Manila Electric Co. (Meralco), the country’s biggest utility.

Meralco sought regulatory approval for the PSAs, covering 3,551 MW, just before the extended April 30, 2016 deadline set by the ERC that required companies to first undergo a competitive selection process (CSP) before closing a supply deal.

Floresinda B. Digal, ERC spokesperson, said of the seven, Meralco had filed an urgent motion for resolution. She identified these as the applications of St. Raphael Power Generation Corp. and Redondo Peninsula Energy, Inc.

Meralco has a stake in the power generation companies, which will also sell their output to the utility.

Sought for comment, Sarah Fairhurst, partner at The Lantau Group, said in her opinion the Meralco PSAs “shouldn’t be approved.”

“I think that the extension for the deadline for the competitive selection policy was unfortunate. I don’t think it was done negligently. I just think nobody expected so many PSAs to suddenly pop up in six months. It has never been done before,” she said.

“I tend to think that they should be reviewed more stringently rather than in a procedural [process],” she said.

The Lantau Group, a strategy and economic consulting firm, specializes in the energy sector in Asia.

The Department of Energy required distribution utilities to subject its supply contracts through a CSP starting on Nov. 7, 2015. The move is in line with rules that require them to procure power at the least cost. But on March 15, 2016, the ERC restated the effective date to April 30, 2016. —