Press Release
April 17, 2012

Solving Mindanao's power crisis
Privatize all power plants or none at all

Sen. Ralph G. Recto yesterday said government should make up its mind whether it would privatize all state-owned power utilities in the country or not.

"A piece-meal approach in the power situation in Mindanao might not be the proverbial light at the end of the tunnel. It's either all power plants are privatized or all should remain under government control," Recto said.

He said privatizing some while keeping other power plants under state's hands might cancel out each other's desired benefits.

Recto nevertheless said government has a dismal track record in operating power plants -- "a record not bound to improve further once it decides to continue keeping the other power plants under its control."

"The government should decide once and for all. A half-baked approach in the Mindanao power situation won't do," he said.

Recto said should a wholesale privatization plan is opted, the energy department (DOE) and the Energy Regulatory Commission should step in to ensure the right energy mix in Mindanao for optimum capacity and efficiency.

"We may forego dreaming of reduced power rates soon but we could surely expect a stable supply at steady prices to attract more manufacturing players in Mindanao," he said.

"We don't want very expensive power rates in Mindanao or any part of the country. But if it can't be lowered soon, we just want the assurance that power rates would remain steady and predictable. Can we maintain power rates at P10 per kWhr until 2016?" Recto, Senate ways and means chair and senior Senate energy member, added.

Recto likewise pointed out this was the reason why during a budget hearing last year, he requested the DOE to submit a power rate scenario "to show how the power rates will look like over the years."

"We requested the DOE to plot how the rates will look like in the coming years so that investors will have an idea on the cost of their power requirements in the future," he said.

The senator lamented the DOE never submitted such power rate scenario.

"It's not enough to promise fewer or no brownouts, the government must also show how the rates will behave over the years," Recto said.

Recto likewise said to placate opposition from the local government units (LGUs), the government may offer to remit directly their shares from the power plants' revenues instead of the present practice of drawing it from the DOE, the national government.

LGUs hosting a power plant receive a percentage from the revenues of the operators.

Recto added that the government must also address the dire power situation in SPUG (Small Power Utilities Group) areas, which affects 2.5 million households that have no direct access to electricity.

Malacanang has announced it would consider privatization of the Agus and Pulangi hydropower plants as way of addressing the acute power supply in Mindanao.

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