Makati Business Club
Management Association of the Philippines

Position Paper
Create A Department of Energy and Formulate an Overall Energy Policy and Program

21 May 1990 -- The serious power shortage which we are currently experiencing is wreaking havoc to our economy and is seriously affecting national efforts to attract badly-needed investors. While the present power shortage crisis is in some measure due to increased economic activity and power demand as well as aggravated by the drought, these are poor excuses for the lack of planning and action on a problem which was foreseen some years ago. In a December 1987 speech, National Power Corporation President Ernesto Aboitiz spoke of anticipated power shortages by 1989 or 1990, given the pace of economic growth at the time. Based on economic growth projections, NPC was estimating that power demand would rise 8 to 10% a year from 1988 to 1990. Compared against an earlier forecast of 4.5% growth per year in power demand, the new forecast indicated a need for an additional 300 megawatts by the end of last year. The energy shortage was expected but the implementation of power projects fell behind schedule. The brownouts that we are now experiencing are the direct result of the government’s failure to marshal the necessary resources to plan and build enough additional capacity to meet the demand that the growth path we are on requires.

In light of this, MBC and MAP recommend the creation of a Department of Energy to be headed by a full-time Cabinet Secretary. The mission of the department should be to formulate and implement overall policy with respect to energy development and power generation. The departments should at once focus on the development of all our viable energy sources as will as formulate a long-term energy program aimed at our needs for the rest of the decade and beyond.

We should also immediately negotiate the building of several power plants instead of going through the long process of bidding out projects. Moreover, we should privatize the power generation industry through Build-Operate-Transfer schemes or through other means.

In the area of geothermal energy, foreign and domestic companies who are willing to develop geothermal sources should be encouraged to do so and should not be prevented by PNOC or any other Philippine government entity from developing these natural resources for the good of the country.

Furthermore, we should undertake a dispassionate, objective study of the safety, technical, and financial feasibility of operating the Bataan Nuclear Power Plant under international standards. If such a study is already completed, its results should be made public so that the question of operating BNPP can once and for all be settled in a rational manner rather than in the emotional and political manner with which the public perceives it has been carried out. In any case, let us continue to consider nuclear power (at sites other than Bataan if safety is in question) as potentially part of our energy mix for the future. If it is fear of nuclear accident that is preventing us from considering this option, let us recognize that the use of nuclear power plants in other parts of the region already places us at some risk in the event of any accident within the region. In spite of this risk, it is our neighbors who are enjoying the benefits (as well as facing the risks) of nuclear power.

Finally, we should have a serious look at our potential fuel shortage and take immediate measures to ensure that our country’s long-term fuel needs will be met. Let us not wait, as we have with the electric power shortage, for a crisis to be upon us before taking the necessary steps to alleviate the problem.