PIDS: LGUs losing P10 B from single power outage

Local governments are estimated to suffer over P10 billion worth of losses from a single electricity supply interruption, affecting the delivery of public services, according to the Philippine Institute for Development Studies (PIDS).

“Based on our back-of-the-envelope calculations, local governments lose around P10.7 billion from a single electricity supply interruption experienced by ECs (electric cooperatives), in a span of five years,” PIDS research fellows Kris Francisco and Michael Abrigo said in a discussion paper that looked into the impact of power outages on local economies.

The authors said the estimated losses were due to reduced income from government enterprises worth P3.8 billion, business taxes amounting to P5.3 billion and real property taxes worth P1.6 billion.

For every additional electricity interruption experienced by ECs, the authors said the business tax collection is reduced by about two percent during the initial year and could reach up to around one percent reduction over the next four years.

They said there is also a decrease in taxes collected from real estate, but the impact is not as intense as what was found on business taxes.

The PIDS study also found that the local government’s ability to provide services related to housing and community development, as well as labor and employment is affected by electricity supply interruptions.

“We also compute that an electricity supply interruption deprives the community of about P3.8 billion worth of undelivered public services related to housing and community development (P3.6 billion), and labor and employment (P300 million), over a five-year period,” the authors said.

They added that the findings show that electricity supply interruptions are detrimental to economic activities within the local communities.

Despite the economic disruption caused by electricity supply interruptions, the authors said this has not received much attention from policymakers.

Given the findings, the PIDS study emphasized the need to improve electricity reliability.

“Improving electricity reliability especially outside the NCR (National Capital Region), is both crucial and urgent as unreliable electricity supply has major repercussions on local growth and development,” the authors said.

According to them, the government’s focus in terms of policy should be on minimizing the frequency of power outages.

“Developing policies that would help boost the performance of ECs as well as ensuring they have access to enough power supply should be high in the list of priorities,” the authors said.