25 Sep ‘Let There Be Light’
As we approach the first 100 days of President Ferdinand “Bongbong” Marcos, Jr.’s term in office, I would like to share my reflections on the priorities of his administration, starting with the country’s energy priorities.
“The availability of cheap, reliable energy” according to President Marcos Jr. is a key component in the administration’s transformation plans for the country. This is essential to fuel an economy that grows at 5-6% per year, and registered 7.8% growth in the first half of 2022.
Getting this right will involve close coordination between the government and the private sector. We must have healthy and capable government institutions led by serious-minded people that will steward energy market improvements, attract new investment, and protect consumers and industry stakeholders.
Thus, in these first 100 days, defining the leadership and the people that will steer the Department of Energy (DoE), the Energy Regulatory Commission (ERC), and other agencies in the energy family are of utmost importance. This is especially true in our current energy context, including the possibility of an energy crisis ahead.
THE STRUGGLEWe find ourselves in a supply and demand situation that is tight. We see yellow and red alerts raised by National Grid Corp. of the Philippines (NGCP) becoming more frequent, with nine alerts so far this year in nine months vs. seven in all of 2021, and just two in 2020. These result from low power reserves and transmission line inadequacies.
We are experiencing the beginning of the end of Malampaya, our only indigenous source of gas. The impact of this may already be felt with the stoppage of dispatch since June of the country’s largest gas plant, the 1200-MW Ilijan Plant, following the contractual termination of a 25-year fuel supply agreement, begun in 1997. A moratorium on coal is also preventing development of new coal power plants; sensible from a climate perspective, challenging for a low-income country trying to promote investment and job creation for its people. We are experiencing renewable and other energy projects curtailed by a lack of transmission capacity. We run the risk of not enough energy supply and transmission capacity to serve the future needs of our country.
As a result of this, customers are experiencing a significant increase in their electric bills, up to 70% in some cases. This is due to an unprecedented rise in the cost of fossil fuels — coal and oil products, which fuel 55% of our power industry. This is driving inflation and creating pressure on the balance sheet of businesses and on the quality of life of people across the country.
Alongside these immediate challenges, the impacts of climate change continue to intensify and affect the Philippines disproportionately. We need to find solutions to decarbonize our energy system, while sustaining the economic prospects of our country. The key challenge facing our new administration is how to balance these two objectives — decarbonizing while promoting economic development — given that renewables today are not yet cheap enough or sufficiently scalable to replace thermal sources.
All in all, our new government has formidable challenges ahead and we must ensure that we have strong government institutions able to tackle them and avert an energy crisis.
NEW HOPEWhile I hold these views dear, they are not mine alone. All of us want to see the Philippines on a trajectory that will bring us to upper middle-income status alongside our ASEAN peers.
It is in this context that I would like to highlight a recent declaration from the Management Association of the Philippines (MAP), which expresses support for the new energy leaders. They will be at the forefront of this journey to build up their respective institutions and to carry out their formidable responsibilities as stewards of our energy system.
“MAP welcomes, and fully and wholeheartedly supports the appointments of Sec. Raphael Perpetuo Lotilla as the energy secretary and Atty. Monalisa Dimalanta as Energy Regulatory Commission (ERC) Chairperson.
“Atty. Lotilla has had a distinguished career as a public servant for 22 years in various capacities — ranging from a professor of law in UP to undersecretary for socioeconomic planning at NEDA (National Economic and Development Authority) under three Presidents, President of PSALM (Power Sector Assets and Liabilities Management Corp.) and then Secretary of Energy. In the international area, he had served as Regional Program Director of the Partnership in Environmental Management for the Seas of East Asia under the United Nations and as Philippine consultant on UNCLOS issues, a key nationally strategic concern.
“In the private sector, he has been an independent director in several public-listed conglomerates with diverse interests in power, banking and financial services, food manufacturing and distribution, real estate and infrastructure. More recently, he served as independent director in a power company, representing the interest of minority shareholders and external stakeholders.
“In his long career in public service, it is a matter of record that his performance has been exemplary, and without blemish, marked by objective professionalism, integrity, competence and dedication.
“Atty. Dimalanta has an outstanding career in law practice, primarily in the area of energy and power regulation, culminating in her chairing the National Renewable Energy Board, an institution created by law (Renewable Energy Law) from 2019 to 2021. For three months, until her appointment, she was affiliated with a power company, as head of legal and compliance where her role was primarily to ensure that company is in full conformity with all laws. She has likewise served with utmost distinction in all her work.
“Both Sec. Lotilla and Chairperson Dimalanta graduated from UP for their BA and Law degrees, and from the University of Michigan for their Masters degrees.
“In the less than two months that both Sec. Lotilla and Chairman Dimalanta have been in office, they have demonstrated clear vision and resolute action.”
This message of confidence from the MAP echoes public statements of many other stakeholders of repute including Tony La Viña, dean of the Ateneo School of Government, Jay Layug, president of the Developers of Renewable Energy for Advancement, Inc., and former Energy Undersecretary, ACEN CEO and President Eric Francia, former DoE Secretary Vince Perez, Anne Montelibano of the Philippine Independent Power Producers Association (PIPPA), Senate President Juan Miguel Zubiri, and former Senate Committee on Energy Chairman Win Gatchalian, among many others.
I know Sec. Popo personally as we have worked together in various capacities including as counterpart undersecretaries in the Ramos administration and as co-Fellows of the Foundation for Economic Freedom, an advocacy group for good economic governance. And I can personally attest that he is a true public servant and a capable leader, which is what we need to fix the problems of our current system and prepare us for the future.
These two leaders are in keeping with the excellent appointments of professionals in other key economic agencies — notably the Departments of Finance, Trade and Industry, Budget and Management, Transportation, and Public Works and Highways, NEDA, and the Bangko Sentral ng Pilipinas.
Sec. Lotilla and Chairman Dimalanta have earned the trust of many leaders through their track record of service, fairness, and excellence. I certainly think that they deserve our support and full cooperation to help deliver on the transformation plans of the President in the energy sector. It is a difficult task, but by working together, we will find a way forward towards a future where the availability of cheap, reliable energy is real every day, for every Filipino.
Romeo L. Bernardo was finance undersecretary from 1990-96. He is a trustee/director of the Foundation for Economic Freedom, the Management Association of the Philippines, and the FINEX Foundation. He also serves as a board director in leading companies in banking and financial services, telecommunication, energy, food and beverage, education, real estate, and others.