Business, Economics and Consulting

It is not as if we only come to know about it today. The looming power shortage has been known, and was made known to the public, as early as more than 3 years ago. At that time, it was estimated that if the growth rate of demand persists, a power shortage would be experienced in Mindanao as early as 2009. That is if the government and the private sector will do nothing which would clearly point us to our only but unacceptable option – to sacrifice and forego business and investment opportunities especially those requiring power for their operation. But which ones do not require power at these times?

In this era, unlike in the late 80s to early 90s, all social interactions and business activities require power. Economies, not only the Philippines, have become power-dependent. Mass production and manufacturing of goods for domestic and export markets necessitate a steady and stable supply of power. Business sustainability, competitiveness and efficiency could only be attained by any growing and thriving economy when power is not a major problem. In reverse, it is hard to expect business expansion, social progress and economic growth when the supply of power is sluggish and unstable.

Power shortage is not as simple as enduring high room temperature during brownouts. It has financial and economic implications when our production lines are not able to meet their highest productive levels. Exchange of goods would be impaired, value chain disrupted, and transaction costs would escalate. These do not include yet the very important opportunity costs for every business deal that is given up because of power outages. In Mindanao, every prospect for business entry and development should not be missed at this time when we need to fire up economic and business activities all over the island which we expect to improve people’s well being and bring about social progress.

What I want to say is that we could have anticipated this problem much earlier. In fairness to the government, the Department of Energy (DOE) formulated a master plan for energy development for the various power grids of the country some years back. The problem I see is the very limited number of investors who are willing to go into the development of additional and alternative sources of energy. I am sure, enabling policies and various forms of incentives have all been put in place to facilitate the entry of potential investors in energy development. Despite these efforts of the government however, there is still a need to see concrete positive response from prospective financiers of energy projects. What else could be the problem?

Last week, we have seen the DOE Chief going around and meeting with owners and operators of power generating plants in Luzon, and ensuring everyone that there would no longer be rotating brownouts in Luzon. Power supply could last up to June 2010. The assurance came with a strong challenge for each one of us to observe prudence on our use of electricity. He further emphasized that power would not be a problem comes election day, and that’s a relief; yet, he hastened to add that rotating brownouts could still happen anytime due to maintenance and repair schedules of existing plants.

As we look for remedies to our power shortage problem, we should not forget the environment. Note that most of our power generating plants are coal-fired; exceptions are the power plants in Mindanao which are mostly hydrothermal and geothermal. In the context of climate change and clean environment, the cheap coal is an extremely dirty source of power, and imposes huge costs on people’s health, the environment and the economy.

While we still have the time before we reach a stalemate, let’s explore the use of clean renewable technologies like wind, solar, geothermal and solid biomass, and we should not forget that the Philippines still has a large amount of untapped deposit of fossil fuel. The government should continue to show us the way. The private sector should take the risk to invest, and every Filipino should endeavor to reduce our country’s coal dependence and move toward a future where power supply is both reasonably priced, sustainable and is not contributing to climate change. No brownouts and no destructions to Mother Earth!

Feel free to send your comments to nic_agustin@yahoo.com.