Demand forecasting is the problem in power generation – PHL Energy chief

The Philippines, or any other country, will never have an over supply in electricity, Energy Secretary Carlos Jericho Petilla said Tuesday at the Mid-Year Philippine Economic Briefing at in Pasay City.

 

An over supply "will be expensive for investors and demand will always catch up," but the real problem in power generation lies in forecasting demand as "it's difficult to predict growth rate," the Energy chief said.

 

"Two, three years ago, forecast was 6 percent growth rate but its 7.5 percent. Now we're panicking because a standard plant will take three to four years to build," Petilla noted.

 

The Philippine economy grew above 7 percent in the last seven consecutive quarters, expanding by 7.5 percent in the second quarter – faster than its Asian neighbors and on a par with China.

 

Power sector subsidies 

 

On power rates, Petilla said the Philippines remains one of the most expensive in Asia but other countries want to learn the how it's done without subsidy for power structure because of it is sustainable.

 

"One reason we cannot compete with Indonesia, Malaysia etc... is due to our power structures. We cannot afford to have subsidies as budget will be taken out from other sectors like education, infrastructure, etc." he said.

 

"We are the most expensive but they want to learn our structure because we don't have subsidy, which they find is more sustainable," he added.

 

In a 2012 study, International Energy Consultants (IEC) noted average electric rates in the Philippines, particularly the Manila Electric Company franchise, was the ninth highest among 44 selected distributors across the globe, and three times higher than Indonesia, Taiwan, South Korea, Thailand and Malaysia – which allocate subsidies for the power sector.

 

From the private sector perspective, power subsidies should instead be channeled to fund important projects and the sustainability of the power sector.

 

"I'm not a believer of subsidies. Things have to be true to their cost to avoid imbalance in capital," Ayala Corp. chairman and CEO Jaime Zobel de Ayala said.

 

Situation Mindanao 

 

The private sector is also calling for investments in Mindanao to help mitigate power problems.

 

"We encourage government to develop power projects in Mindanao, which is the true engine for growth and development in Mindanao," Michael Rodriguez, managing director and head of Macquarie Infrastructure and Real Estate Assets.

 

In March, the Energy Department reported Mindanao will have a supply shortfall of 300 megawatts (MW).

 

However, Petilla said Mindanao will have a "stable power supply" in two years.

 

"Power plants are coming, some companies are actually constructing already. The 300 MW curtailment until 2015 will be addressed by the upcoming plants with a total generating capacity of 800 MW," he added. — VS, GMA News