BPO investors worried by Iloilo power uncertainty

NEW INVESTMENT in the information and technology industry in Iloilo City, particularly the business processes outsourcing (BPO) sector, could slow down due to the unresolved arrangements for the city’s power distribution.

Iloilo Federation for Information Technology (IFIT) Chairman Jessraf S. Palmares, in an interview, said some potential investors are reluctant to pursue their planned ventures.

“There are other players who want to come to the city, but they are hesitant to come in because of the issue,” Mr. Palmares said.

The city’s current power distributor lost its franchise but is mounting a legal challenge to the new franchise holder’s bid to take over its physical assets.

“The longer this issue stays we cannot assure that new investors will come in. Existing investors are telling us that they will be looking into other sites. The situation is preventing investors from coming in,” he added.

Mr. Palmares said the association had no issues with the service of the outgoing distributor, Panay Electric Co. Inc. (PECO).

“So far for the last few years there has been a surge in development, and we have grown the industry rapidly, which requires a lot of power, and they were able to meet our requirements,” he said.

“As an industry, we don’t have any issue and problems with [PECO], so our question is why fix it when it’s not broken?”

On Feb. 28, the new franchise holder, MORE Power and Electric Co. (MORE Power), presented its plans to the business sector in a closed-door forum organized by the Iloilo Economic Development Foundation Inc.

The company’s franchise was signed by President Rodrigo R. Duterte on Feb 14.

MORE Power President Roel Z. Castro told the business community that it will provide upgraded customer service, simplify the application process and make payment centers more accessible.

With a committed capital expenditure of P1.3-billion, MORE Power also promised to improve supply distribution.

MORE Power also promised to deliver cheaper cost with an indicative potential savings of P1.21/kilowatt-hour (kWh) compared to current charges.

Mr. Castro said MORE Power has been negotiating with possible power producers in the Visayas offering power supply at the least cost.

“Our negotiations are in the final stages with AP Renewables Inc, KEPCO SPC Power Corp., and Palm Concepcion Power Corp.. They are offering 1/3 less of the existing power generation, which is P7.84 kWh as of January 2019. That is P6.63/kWh vs P7.84/kWh,” he explained.

However, Mr. Palmares said cheaper power is less important than “reliability” above anything else.

“Yes, they have lowered cost but that is not how the IT industry thinks. The lowered price does not really affect us... It’s more of reliability,” he said.

The BPO industry has set an employment target of 30,000 employees by 2022, according to Mr. Palmares.

“The problem is, existing companies, with all these problems with (power distribution), will decide to pull out because of uncertainty,” he said.

As the incoming franchise holder, MORE Power does not have assets in place.

On the other hand, PECO, whose franchise expired on Jan. 19, has maintained that it will not sell its assets to MORE Power and will mount a legal challenge all the way to the Supreme Court if necessary.

PECO has been granted an extension of at least two years until MORE Power is ready to take over.

Iloilo province’s Local Economic and Investment Promotion Officer (LEIPO) Velma Jane C. Lao said the battle is now between PECO and the government.

“It’s not even a fight between PECO and MORE Power. It’s PECO and now the government if they take a hard stance on this,” she said

Halley Alcarde, assistant vice-president of Gaisano Capital, backed Ms. Lao’s position and said the government should to do what is beneficial for the public.

“Government right now has the balls to do and implement what’s due and right for the people,” he said.

Mr. Alcarde also questioned PECO’s inability to lower electricity prices in recent years despite the availability of lower power supply.

“Every time we presented Iloilo to businessmen and investors, they always say that your power costs are very high,” he said.

Iloilo Business Club (IBC) Executive Director Maria Victoria Lara said she hopes that the situation will be resolved immediately.

“They have assured us (that) the public will not be inconvenienced... The sooner that all these things are resolved, the better it is for consumers,” she said. —