Study on Energy Philippines
Project Background
The Philippines remains as one of the best performing economies in Asia, as it grew 7.2% in 2013, which is better than the 6.8% growth posted in 2012. Its growth is based on consumption as well as growth in infrastructure investments – both public and private. Over the past two and a half decades, the institutions have been put in place and these include among others: restoration of democracy; transformation of telecommunications, public utilities (water and electricity), transportation and banking industries; and investments in public infrastructure. Along this line, credit ratings upgrade from Fitch, S&P and Moodys is expected to result in growing international investment interest.
To support future economic growth targets, there is a need to focus on more infrastructure and power. However, this early it is a given that demand for power is likely to exceed committed capacity forecasted by regulatory bodies.
Regulatory Framework – Power Industry
In 1987, Executive Order Number 215 permitted and encouraged the private sector participation in power generation to remit National Power Corporation’s (NPC) monopoly. This was followed by Republic Act 6957 or the Build-Operate-and Transfer (BOT) Law in 1990, which permitted private contractors under a BOT or Build-and-Transfer (BAT) scheme to construct and operate power generation facilities for an assured “reasonable return of its investment and operating and maintenance costs.”
In 1992, with NPC’s failure to prudently operate and maintain its plants – only at 50 to 70 percent operational – as well as its failure to build additional capacity, the country plunged into a power shortage with daily blackouts of up to 12 hours. If the number of hours were added, this totaled 103 days straight without power. Thus in 1993, the Electric Power Crisis Act was enacted to give the president the power to “enter into negotiated contracts for construction, repair, rehabilitation, improvement and
The Philippines remains as one of the best performing economies in Asia, as it grew 7.2% in 2013, which is better than the 6.8% growth posted in 2012. Its growth is based on consumption as well as growth in infrastructure investments – both public and private. Over the past two and a half decades, the institutions have been put in place and these include among others: restoration of democracy; transformation of telecommunications, public utilities (water and electricity), transportation and banking industries; and investments in public infrastructure. Along this line, credit ratings upgrade from Fitch, S&P and Moodys is expected to result in growing international investment interest.
To support future economic growth targets, there is a need to focus on more infrastructure and power. However, this early it is a given that demand for power is likely to exceed committed capacity forecasted by regulatory bodies.
Regulatory Framework – Power Industry
In 1987, Executive Order Number 215 permitted and encouraged the private sector participation in power generation to remit National Power Corporation’s (NPC) monopoly. This was followed by Republic Act 6957 or the Build-Operate-and Transfer (BOT) Law in 1990, which permitted private contractors under a BOT or Build-and-Transfer (BAT) scheme to construct and operate power generation facilities for an assured “reasonable return of its investment and operating and maintenance costs.”
In 1992, with NPC’s failure to prudently operate and maintain its plants – only at 50 to 70 percent operational – as well as its failure to build additional capacity, the country plunged into a power shortage with daily blackouts of up to 12 hours. If the number of hours were added, this totaled 103 days straight without power. Thus in 1993, the Electric Power Crisis Act was enacted to give the president the power to “enter into negotiated contracts for construction, repair, rehabilitation, improvement and