May 29, 2024

The government must be willing to invest large amounts of time and resources in future-proofing the Philippines’ power sector if it is serious in resolving the energy supply interruptions that inflict damage to the economy, according to a new study by the Philippine Institute for Development Studies.

The report, which delves into the electricity supply issues in the Philippines, noted power outages remain a big problem and discussed how unreliable electricity is affecting businesses in the country.

It cited the latest World Bank enterprise survey in which company representatives signified that electricity supply issues continue to be one of the factors affecting the business environment in the Philippines.

The surveyed firms shared they were losing 0.8 percent of their annual sales, on average, due to power outages. Consequently, owning or sharing generators appeared to be a defensive mechanism.

More than 40 percent of firms in the Philippines were dependent on generators, where they sourced around 39 percent of their power supply. Generator ownership was particularly high in Metro Cebu at 66 percent, says the document.

“Generally, this information from the World Bank enterprise survey implies that doing business in the country is more costly due to unreliable electricity,” said study author and PIDS research fellow Kris Francisco in an online forum this month where she presented the results of her research.

The discussion paper identified at least three major causes of power interruptions in the country: lack of power supply, technical issues, and environmental factors such as natural events.

Of these, environmental factors trigger a big portion of the disruptions, with “major storm disaster” as the biggest issue and a cause for concern since the Philippines is a typhoon-prone country.

Meanwhile, technical-related issues constitute the second largest factor affecting power interruptions.

Insufficient supply of power to electric cooperatives is also a big issue in itself, where utilities in the Visayas are suffering the most.

The research observed past efforts to address these problems appear lukewarm.

“Electricity supply interruptions, despite the enormous disturbance it causes the economy, have historically received little attention from our policymakers,” it says.

It reported in 2021, consumers on average experienced around 5.7 power interruptions a year, translating to a total of 8.8 hours of no electricity.

Consumers in Luzon experienced more frequent power interruptions, while consumers in Visayas endured longer hours of no electricity.

Among the list of causes, insufficient supply of power to electric cooperatives or ECs emerged as the main driver of frequent and long hours of power interruptions.

Meanwhile, it takes around 1.5 hours to restore electricity after a power outage, and supply takes the longest time to restore when the damage is done by a major storm disaster, says the paper.

In his message to the forum, PIDS president Aniceto Orbeta, Jr. also pointed out the Philippines has some of the most expensive energy prices in Asia, noting that the country’s rates are between 25 percent and 87 percent higher than some of its neighbors in Southeast Asia.

He added it does not help that the country is heavily reliant on imported fossil fuels, with the high cost of importation often passed on to consumers.

The expected depletion of the Malampaya natural gas field by 2024 will likely exacerbate this impending energy crisis, he warned.

Francisco suggests three major areas of intervention, all requiring the putting in of large amounts of time and investment in the power sector. 

Her first recommendation is to “improve the access of electric cooperatives to sufficient power supply to improve their services” to households outside of Metro Manila.

“While the solution for such immense problem requires time and major resources, policies towards expanding the generation capacity as well as the access of ECs to more power supply should be prioritized,” she said.

She also suggested helping these ECs improve their technical efficiency to enhance the reliability of electricity supply all over the country.

“The country must work towards climate-proofing the energy infrastructure to protect it from damage and shorten the duration of downtime so that “when typhoons strike, it will take us a shorter time to restore the power,” said Francisco. – Press release