Ph High Power Rates Shoo Away Foreign Investors

The high cost and unreliable supply of electricity in the Philippines are now the main deterrents to investing in the country, according to foreign business leaders who see the problem as a persuasive reason to invest overseas.

Vietnam, for instance,  has overtaken the Philippines in terms of foreign direct investments.

While Manila lagged behind its neighbors in Southeast Asia,  Hanoi – the capital of Vietnam- is now enjoying a double-digit foreign direct investment (FDI) levels.

Foreign Investors in Vietnam

According to a survey done by the International Energy Consultants (IEC), an Australian-based consulting firm specializing in Asian power markets, electricity rates in the Philippines are the third highest in Asia and fourth in the Asia-Pacific region.

The Philippines’s power rates are also the 16th highest in the world.

Given these circumstances, the government is working hard on adding more capacity and acknowledged that it needs to add around 1,000 megawatts of new generating capacity every year between now and 2030 if it is to overcome the country energy crisis.

This means construction of more power plants, more in particular coal-fired power plants that are cheaper to construct and operate with greater capacity than the so-called renewable power sources.

The Philippines electricity prices at an average cost of P15 per kilowatt hour are some of the highest in Asia and have become prohibitive to many investors. Compared to booming countries like Malaysia, Thailand and Indonesia, the Philippines is badly suffering from a dip in foreign direct investment with expensive electricity cost as the main culprit.

Solution? Construction of more coal-fired power plants to meet the need to produce about 1,000 megawatts a year.

                                                Ovetaken

Data from the regional grouping showed that “erstwhile tailender” Vietnam, whose population stood at 96 million as of July 2017, has overtaken the Philippines in attracting foreign direct investments with $12.6 billion in FDI in 2016.

The Philippines obtained $7.9 billion, according to three investment watchdogs Moody’s, Standard & Poor, and Fitch Ratings.

A total of $53.9 billion in FDI went to Singapore; the same year $11.3 billion went to Malaysia.

Both the Philippines and Vietnam have at least 300,000 square kilometers in total land area.

                                               

Coal plants

To address the situation, President Rodrigo Duterte said the Philippines will continue to use coal in power generation but will implement new technologies to minimize emissions.

“But for as long as the most viable fuel is coal and cheapest so that the power can also be delivered the energy to the people at a much lower price, then we’ll have no other alternative except to upgrade the technology to its fullest―to limit,” Duterte said during a  recent visit to Sarangani for the groundbreaking of another coal-fired-power plant.

The President said he sees nothing wrong with the government’s plan to put up new coal-fired power plants to boost power supply in the country.

“You open the Philippines for all power players, I guarantee you the electricity will become cheaper,” he pointed out.

The President said  in January that building more coal-fired power plants is necessary to meet the nation’s growing energy needs and for the Philippines to stay competitive in attracting foreign investors.

These pronouncements of President Duterte delighted residents and officials of the municipality of Sual following a report that a multi-national company, Korean Electric Power Corporation, is keen on putting up another coal-fired-power plant in their town that would produce 1,000 megawatts.

The company, the report said, will be using ultra-supercritical combustion technology that greatly reduces pollution, as prescribed by the President.

In welcoming the entry of another power plant in their locality, Sual residents said this would mean hundreds of jobs for the people and millions of pesos of additional revenues for the municipality.

Additional power plants would also mean stable supply of electricity at cheaper price and less brownouts, they said. (P.R News)