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November 12, 2014

BUSINESSMIRROR Editorial: What's next, a sand shortage?

THE subject line of an e-mailed November 9 news release from the office of Party-list Rep. Arnel Ty of the Liquefied Petroleum Gas Marketers Association not only got our attention, but also shocked us: “263 PSE (Philippine Stock Exchange)-listed firms asked to run own generators to ease power lack in summer of 2015.” In the release, Ty said: “We are appealing to all PSE-listed firms to join the Interruptible Load Program (ILP).”

While we applaud Ty’s initiative, since he seems to be one of very few people who are trying to be proactive about the problem, we are somewhat appalled that our lights will stay on next summer only if the private sector comes on board with his proposal.

Certainly, the lawmaker is thinking ahead and looking for some stop-gap measures. However, the implication that the situation might be so severe that it needs to appeal to the good graces and “corporate social responsibility” of these companies is chilling.

According to Department of Energy (DOE) estimates, a power shortfall between 300 to 1,200 megawatts (MW) may affect the Luzon grid by March 2015. The Philippine Chamber of Commerce and Industry estimates that privately owned back-up generators could supply up to 2,000 MW. This means the private sector could supply enough power to avoid brownouts.

One problem with this is that the cost of electricity to the consumer will go higher, and the government had said it would subsidize price increase. But what about the additional power costs to the private companies that are bailing out the government? A bigger and more important question is this: Why do we have a DOE, with an annual budget of P3.3 billion, if, at the end of the day, we have to rely on SM Prime Holdings Inc., Megaworld Corp. and Philippine Long Distance Telephone Co. – all of which have agreed to join in the program – to supply the nation’s power?

The DOE’s mission is “to ensure sustainable, stable, secure, sufficient and accessible energy.” Apparently the DOE fails on all points, and it is up to private sector to do the government’s job.

Energy Secretary Carlos Jericho L. Petilla recently said the DOE had no choice but to rely on the ILP. That sounds like an admission on his department’s failure to fulfill its mandate to “to prepare, integrate, coordinate, supervise and control all plans, programs, projects and activities of the government relative to energy.” Sure, the legislature is at fault, but it is the DOE’s job to make sure these power shortages do not happen.

American economist Milton Friedman once said, “If you put the government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” Fortunately for us, if it was the Philippine government in charge, there would be an SM department store having a “buy one, take one” sale on bags of sand.

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