POWER CRISIS IN THE PHILIPPINES

We all know that our country is submerged to encounter severe power interruptions
due to lack of electricity reserves in the power plants, especially the hydroelectric
power plants. It is because of the drought that is happening in the phillipines, which
may lead because of the existing Global Warming of the Earth, thus we all suffer in
this season, we should learn how to deal with this scenario because it wont stop,
but it will become worst. To become well-oriented here are some topics that might
be helpful for us to be awaken.
As predicted, the Philippines is expected to encounter into a summer power crisis. One peculiarity
of the widespread use of English in the Philippines is the mismatch between seasonal names and the
months of the year. Leaves start falling from trees in March is it autumn? No, trees are just
preparing for the dead season not the long cold nights of winter, but the long, hot dry days of
summer: April and May. The Philippine term for this period is literally the time of heat, but among
English speakers this is summer, rather to the bemusement of Americans who associate that term
with June through August.
Thus the label summer brownouts for the impending power shortage expected to descend on the
Philippines in the next few weeks. Brownouts is another Filipinism rather than referring to
voltage reductions, it means power outages or blackouts.
Hydropower is reduced due to the seasonal dry spell, and a major gas production facility supplying
power plants will be shut down, so that electricity reserves will be running lower low enough that a
random tripping or shutdown of a power plant on the grid might cause widespread outages. Or
there may be more proactive management of an electricity shortage, with rotating outages among
localities a practice that is fairly common in the southern island of Mindanao.
Those with long memories will remember that the Philippines has been here before, in the dark days
of the early 1990s under the administration of President Corazon Aquino. The 1986 ouster of
President Marcos led to the cancellation of a controversial nuclear power plant, and no new capacity
was built leading to daylong outages that stalled the economy. The incoming Ramos
administration (1992-1998) solved the problem through emergency powers granted by the 1991
Energy Crisis Act to conclude contracts for new power generation. Those whose memories do not go
back that far might know that this looming energy crisis has been predicted for a year now, and
general concern for electricity supply (and price) has been a feature in the Philippines for years.

HISTORY OF POWER CRISIS IN THE PHILIPPINES

During the 1970s and 1980s, the Philippines sought growth and self-sufficiency in
energy production. In 1972 the government altered the legal arrangements for oil
exploration from concessions to a service contracts, and serious oil exploration began
in the mid- and late 1970s. As a result of exploration in the Palawan-Sulu seabed, oil
was discovered in the Nido oil field in 1976. Commercial production began in 1979
and yielded 8.8 million barrels. Successful wells also were drilled in the Cadlao and
Matinloc fields off Palawan in 1981 and 1982, but the fields were relatively small.
The level of production varied during the 1980s but never exceeded 5 million barrels
in any one year. In 1988 local production--2.2 million barrels--accounted for only 3
percent of domestic oil use. A study released in early 1990, indicating that the geology
of the Philippines was a favorable indicator of possible additional petroleum deposits,
was used by the government to encourage oil exploration firms. Production-sharing
arrangements allowed a firm first to recover the cost of its investment, after which 60
percent of profits would go to the government. In December 1990, there were new
discoveries of oil and natural gas off the northwest coast of Palawan Island. Tests
showed that the oil well could have a flow rate of 6,000 barrels per day, with potential
reserves of about 1 billion barrels.
Between 1973 and 1983, power generation increased at an annual rate of 7.0 percent,
two percentage points above the growth rate of real gross domestic product (GDP). In
1988 the National Power Corporation, which produced approximately 90 percent of
the country's electricity, had a generating capacity of 5,772 megawatts. Of that, 42
percent was from oil-burning plants and 7 percent from dual oil-coal facilities. An
additional 37 percent was from hydroelectric plants, and just under 15 percent was
from geothermal plants.
The Philippines had a wealth of potential energy resources. It ranked second behind
the United States in production of electricity from geothermal sources. Installed
capacity in 1988 was 828 megawatts; estimated potential was 35,000 megawatts.
Undeveloped hydroelectric potential of 3,771 megawatts also was identified. Coal
resources, estimated to be 1.2 billion tons, also were plentiful, although of a rather
poor grade for electrical generation. In addition to these sources, solar, animal waste,
agriwaste, and other nonconventional sources were utilized for generating small
amounts of electricity and other energy needs in rural areas. Together they accounted
for about 15 percent of energy consumption.

In 1990 the Philippines was confronted with a crisis of insufficient electrical

generating capacity. Metro Manila and the thirty-three provinces in the Luzon power
grid experienced brownouts of up to four hours per day, with the grid averaging a
daily deficiency of 262 megawatts. At the root of the problem was the decision by the
Marcos regime to build a 620 megawatt nuclear-power plant on the Bataan Peninsula.
The Aquino government decided not to use the facility because it was located on a
seismic fault. As a result, a badly needed expansion of generating capacity in Luzon,
which accounted for 75 percent of national electric consumption, did not come on
line. The problem was compounded by inadequate planning and bureaucratic delays.
There were delays in the building of a facility capable of generating 110 megawatts of
geothermal power in Albay Province and a 300 megawatt coal-fired plant in Batangas
Province. The short-term solution was to put up a series of gas-turbine plants with a
combined rating of 500 megawatts. Only 245 megawatts came on stream between
1987 and 1989. Economists estimated that to achieve a 5.6 percent growth rate in real
GNP, the country would need an additional 300 megawatts of generating capacity
yearly.
Efforts also were being made to expand the country's rural electrification program. In
1985 it covered the franchise area of some 120 electrical cooperatives, reaching
around 2.7 million households. The government planned to expand the coverage to
some 4 million households by 1992.
CONTROVERSIES ABOUT POWER CRISIS IN THE PHILIPPINES
So why hasnt the governments response been more proactive? One answer is red tape. The
Department of Energy estimates that it takes 165 signatures and a minimum of three years to secure
the necessary permits (which can then be challenged, and delayed, in court by local activists opposed
to, say, coal power plants). Another is reluctance of some investors in the face of contractual and
pricing insecurity. In the last decade, the previous Arroyo administration renegotiated the contracts
made during the energy crisis in the 1990s to try to get more favorable terms. And the Energy
Regulatory Commission has often been slow to approve cost recovery, delaying rate changes in the
face of increasing generation costs.
The main response to the predicted shortages has been the Interruptible Load Program (ILP). This
enrolls large establishments who have their own generators (shopping malls, office buildings,
factories) to voluntarily interrupt their power from the main grid and start running their generators
when a shortage is predicted. The concept is that if an outage occurred they would have to do so
anyway, so it is more socially and economically beneficial to do this in a planned fashion. Though the
details of compensation its source and amount have not been finalized, many firms have signed
up. Some private sector economists feel this will be sufficient. Others are not so sanguine, including
the governments Department of Energy. Thus, last year, the administration of President Noynoy
Aquino requested a joint congressional resolution granting him emergency powers for a limited time
period to fast-track contracts for new power generation. The proposal was controversial naturally

the political opposition was suspicious of increased presidential powers; some felt that since the ILP
was in place it was not necessary, and others recalled the Ramos example as yielding high-priced
power. In the event, Congress has not (as of this writing) passed the resolutions both the Senate
and House of Representatives passed a version, but a conference committee has been unable to
resolve differences.
This feeds into the discourse about a power shortage of another kind the allegedly waning power
of President Aquino. Last year there were controversies about pork barrel funding through
legislative-executive collaboration, and a flexible executive budgetary process (the Disbursement
Acceleration Program), both of which were declared unconstitutional by the Supreme Court. Many
warned that without these political tools the presidents influence over the legislative process would
be weakened.
Most recently there has been the constant controversy over the January 25 clashin Mamasapano,
Maguindanao, where 44 members of the Philippine National Police Special Action Force were killed
in an operation against the Malaysian terrorist Marwan. Eighteen members of the Moro Islamic
Liberation Front were killed in the incident, along with five civilians. For six weeks now,
controversies, multiple inquiries, and televised Congressional hearings have dominated the
headlines.
This week public opinion data showed that nationwide approval and trust of President Aquino had
taken a hit. Many take this as another sign that the president is weakened politically. What they do
not take into account is that he is far more popular than was President Gloria Macapagal-Arroyo at
a similar point in her presidential term (15 months before the end), and she remained a political
force right up to the very last day of her incumbency.
So, well have to see if the Philippines can avoid power outages this summer. But we can confidently
predict a President Aquino to be reckoned with until July 2016, when he steps down.
Steven Rood is The Asia Foundations country representative in the Philippines.