The Future of Power Industry Reforms: International Experiences and Lessons for the Philippines

The Asian Institute of Management Policy Center, in partnership with the Department of Energy (DOE), the United States Agency for International Development (USAID) and the Energy and Clean Air Project (ECAP) hosted a lecture-forum entitled “The Future of Power Industry Reforms: International Experiences and Lessons for the Philippines,” held last May 26, 2006 at the Rizal Ballroom C of the Makati Shangri-La Hotel.

This lecture-forum featured Stanford University professor and Program on Energy and Sustainable Development Director, Dr. David G. Victor. Upon discussing points from the experiences of reforms made in Brazil, China, India, Mexico and South Africa, Dr. Victor drew the following conclusions:

1. The role of the independent power producers (IPPs) in power sector reform is significant, as it has been observed in many country cases. The Philippines experience has been unprecedented due to the number of IPP contracts that the government engaged in to abate the power crisis in the 1990’s.

2. Reforms tend to be slow and sometimes lead to the dominance of “dual firms”. In essence, no successful reforms have been recorded, especially those that are designed to create real markets.

3. Market reforms create weak links. The experience of countries points to the insolvency of state companies, usual those on the distribution side.

4. The role of independent regulators is very essential although true empowerment is difficult.

Following the discussion of Dr. Victor, reactions were culled from key leaders from the power sector, business and the academe. The reactors included:

• Hon. Cyril C. Del Callar, President, National Power Corporation
• Mr. Peter D. Garrucho, Jr., Vice President and CEO, First Gen Corporation
• Mr. Lasse A. Holopainen, President, Philippine Electricity Market Corporation
• Dr. Benjamin Austria, Committee on Energy, Philippine Chamber of Commerce and Industry, on behalf of Amb. Donald G. Dee, President of PCCI
• Dr. Fernando Y. Roxas, Faculty, AIM-W.Sycip Graduate School of Business

The lecture-forum gathered corporation heads such as Mr. Jesus Francisco of Meralco, Mr. Gil Gu Lee of Kepco Philippines and Mr. Geronimo Nepomuceno of Angeles Electric Corporation, among others. Government officials such as Comm. Oliver Butalid of the Energy Regulatory Commission came to participate. The event closed with an address from DOE Secretary Raphael P.M. Lotilla on the direction of the reforms spearheaded by the department – one that takes into consideration the social dimension of reforms being implemented.

The presentation of Dr. David Victor and two other papers prepared by Dr. Erik Woodhouse of the PESD entitled "The IPP Experience of the Philippines" and "The Experience of Independent Power Producers in Developing Countries" may be downloaded at the AIM Policy Center website: www.policy.aim.edu