AN opposition legislator is calling on the government to act swiftly on reports that foreign investors are threatening to take their businesses to other countries because of high cost of power in the country.

Lakas-Kampi-CMD Rep. Maria Milagros Magsaysay of Zambales also pressed for the exploration of alternative sources of power to ease utility costs shouldered on industries and consumers.

“When the Philippines topped the list of countries in Asia with the highest cost of electricity, it was already a bad indication for the country [which could] be attributed to the contracts entered into by the government with independent power producers [IPPs] with contract prices higher than prevailing market prices,” said Magsaysay.

“The contracts are already existing and [have] been signed ages ago, but we cannot simply let things continue as they stand. Even the Power Sector Assets and Liabilities Management Corp. [Psalm] under the Electric Power Industry Reform Act  [are] acknowledging that there [were] overpayments made to the IPPs. So there must be some adjustments made,” she added.

Magsaysay reiterated her call to review and renegotiate the contracts if necessary because consumers are bearing the brunt of every power increase that the ERC approves.

Reacting to Magsaysay’s call, Energy Secretary Jose Rene Almendras said a review of current IPP contracts is a complicated process that will not redound to the benefit and interests of power consumers.

“We have to accept the fact that there are certain commitment made by previous governments that we cannot simply just throw out because there will be repercussions to the present and future situation,” the energy chief said.

Data obtained from the energy department, however, showed that it successfully renegotiated some 20 IPP contracts which generated at least $3-billion savings in nominal terms and $1.04 billion in discounted present value terms.

Magsaysay, likewise, suggested a study on alternative sources of power to bring down the cost of utilities for major industries doing business in the country.

“Let us not wait until foreign investors pack up their bags and leave the country because of this issue. If they leave, then how can we convince others that the Philippines is a great investment location? True, we have an excellent pool of talented work force. We have a good business environment but if the cost of their operations remain high, it is natural for them to rethink staying. And we must not allow this happen,” Magsaysay said.

Earlier, the House of Representatives’ Energy Committee directed  the Department of Energy (DOE) and PSALM to renegotiate  the terms of 19 existing IPP contracts to  reduce or totally do away with P74 billion worth of stranded contract costs that it plans to pass on to electricity consumers through a monthly P0.36/kWh universal charge.

Party-list Rep. Teodoro Casiño of Bayan Muna urged the panel that pending the outcome of negotiations with IPPs, the imposition of additional power charges in the universal charge be suspended.

The DOE and Psalm reported to the committee that the production cost of an IPP averages P20/kWh, a far cry from the P3/kWh reportedly being charged by other power plants. It is also estimated that the country may have overpaid by as much as $10 billion due to IPPs, and the overpayments may even continue for another decade. 

Casiño said the Psalm’s petition for a rate hike “is not only cruel, considering that this would further increase the already highest power rates in Asia, but is also unjust because it legitimizes the onerous contracts entered into by previous administrations with favored IPPs.

Casiño cited among the most onerous features of the said contracts are the “take or pay” provisions that require payment even for unused power.