President Rodrigo Duterte made strong pronouncements after attending the Asia Pacific Economic Cooperation in Peru, promising to open up our utilities to more competition.
In his speech delivered in New Zealand, the president said “The only way to make this country move faster to benefit the poor is really to open up the communications, the airwaves and the entire energy sector. My decision now is to open the Philippine economy to other players.”
He further added that the government is “now also looking into regulatory requirements and institutional arrangements to hasten the entry of new players in the power industry and energy sector.”
This is good news for us, not only for energy players like myself but the rest of the country. I have long been advocating for the opening up of the sector to more players, including foreign ones. I have always been vocal in my desire to lift the 40 percent restriction on foreign ownership to address the energy needs of our country for several reasons.
For one, the building of power plants, particularly renewable energy plants is capital intensive, and there are very few local businessmen who can cough up the needed money to explore and build RE plants. The government no longer spends for the exploration of renewable energy and has left the task to the private sector. Unfortunately, exploration is not a cheap undertaking.
Take the case of geothermal energy where drilling of a single hole can cost $5 million, and that doesn’t include expenses incurred for the feasibility studies before drilling.
What we need are foreign investors who can shell out the money and provide the technologies needed to harness the energy from renewable sources because local businessmen do not have them. What we can do is to limit the foreign ownership of the renewable sources, but welcome more foreign investors to own equipment needed to convert our resources.
There’s another reason why the energy sector is ripe for more foreign ownership. The International Energy Agency or IEA has reported that roughly $165 trillion funds are ready for renewable and efficiency efforts from the years 2020 to 2030 after the government heads last year signed the agreement to reduce and limit carbon emissions to help save the environment. This means the Philippines can take a share of that pie if we open ourselves to more foreign owners. We are, after all, a natural choice to receive these funds given the country’s abundance of natural resources.
The Philippines has been one of the fastest growing economy in the region and the Duterte administration is determined to keep our economic growth momentum that will be felt by the Filipinos. But the government can only accomplish such by building infrastructure to support our economic growth including power plants for stable and affordable energy supply.
Hopefully, the president can achieve his goals by having a cooperative Congress that will push for the needed changes in the Constitution. This necessary change is long overdue.