“Those who have misgivings with regard to government’s re-entry in the power generation sector should just look at other countries and they will see that their public sector has maintained a critical presence in the industry and they are able to make it work,” Deputy Speaker Lorenzo “Erin” Tañada III said in the hope of contributing to a lasting solution in the power problem in Mindanao and the rest of the country.
“Our neighbors, despite initial plans to restructure EPIRA-style, in the end chose different paths that retained for government direct role in power generation. Thailand’s EGAT, for instance, remains an integrated government utility, with a mix of own-generation and power purchase agreements from Independent Power Producers (IPPs) as well as small and very small power producers using renewable energy,” he added.
There are so far two criticisms against his call for government’s re-entry into the generation sector: One, it is argued that government does not have the financial capability to put up even one baseload plant, and that this will eat up into budget available for more important expenditures. Second, it is argued that the new government generation company will surely bungle the job.
With regard to government’s financial capacity to do so, Tañada countered that it assumes that government will put up the total funds up-front, which is not the case. “Whether it is by government or the by private sector, putting up baseload plants is mainly through project financing, to be paid from the income stream over the useful life of the plant. Also, there are other available modes, such as through the various BOT arrangements where appropriate.”
On the second argument that government will just bungle the job, “I do not think this is a foregone outcome, especially at this time that we are introducing governance reforms to institutionalize daang matuwid. A government corporation can be run efficiently and competitively, and conversely a private corporation can be mismanaged,” Tañada expounded.
Tañada reiterated that he is not advocating for the renationalization of the entire generation sector as it will be highly disruptive to the market, and government cannot afford it. “But being a player in the generation market through a government corporate instrumentality, with ability to generate or contract new capacity, can be done.”
“I share President Aquino’s dream that this energy situation be one less worry not just for Mindanaoans, but for all Filipinos, when he leaves office in 2016. For such dream to be reality, we need government to reenter the business of power generation now,” he ended.
Tañada is a member of the Joint Congressional Power Commission.