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Analysis

Power shortage shock foreshadows fall of government

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A widespread power failure hit Metro Manila and parts of Luzon Wednesday with the force of a tsunami for up to six hours, paralyzing light rail transport and disrupting office services.

It followed the shutdown of five major power plants in Luzon and came at the worst and unwanted time for the government, just less than a week before the May 13 elections, when the administration’s Team PNoy senatorial ticket is being rocked by internal squabbles among its leading candidates.

It came as a shock to the people of Metro Manila and Luzon, bringing to their doorsteps the nightmare of the rolling daily power outages—some lasting up to 12 hours—that have ravaged Mindanao since March. This is the first time that outages of such scale hit Metro Manila and parts of Luzon since the dying days of the administration of President Corazon Aquino, mother of the incumbent. It reminded everyone of the Cory regime’s inability to provide sufficient energy sources to spur sustained economic development.

The reappearance of the extensive power blackouts that plagued the Cory administration resurrected the issue that the incumbent administration was falling on the job of giving momentum to the less than brilliant economic growth last year and fueled doubts about its sustainability. The blackout also sparked fears of a massive power shutdown on Election Day, which might cause a failure of elections dependent on voting machines run by electricity.

The administration was apparently taken by surprise by the extent of the power outages, although days prior to the big shock of Wednesday, there had been warning signs. The shock was preceded  by sporadic outages, disrupting normal electricity supply in many offices and facilities in Metro Manila.

Officials were quick to dismiss the idea that the Wednesday blackout that began at about 2 p.m. and lasted up to four hours was election-related. Energy Secretary Jericho Petilla claimed that the blackout started with the “tripping” of a power plant in Batangas. The tripping spread to four other power plants, downing transmission lines operated by the National Grid Corp. of the Philippines.

The power failure cut through northern and central Luzon, disrupting economic activity in Metro Manila and surrounding provinces as far as Bataan, Zambales, Pangasinan, La Union, Ilocos Sur and Ilocos Norte. Petilla said the outage affected 3,700 megawatts, representing 45 percent of Luzon’s total peak electricity requirements.

He identified the crippled power plants as the Sual plant in Pangasinan, the Ilijan gas-fired plant; the Sta. Rita and San Lorenzo natural gas plants; and the Quezon Power Philippines Ltd. plant. The power failure not only stopped light rail operations for hours but also hit Malacañang, the Commission on Elections headquarters in Intramuros, Manila, and Camp Aguinaldo, headquarters of the defense department.

The outage came amid preparations by the Comelec to install a system of automated voting machines. A disruption of the voting due to power failure is bound to create issues over the integrity of the voting process.

The extensive and unexpected power shutdown underlined its economic, more than its political, implications. It served to heighten public suspicion that the government is not in control of ensuring fair and honest elections.

The power outage came on the heels of the confirmation by Standard & Poor’s of the Philippines’ its first investment-grade rating by Fitch Ratings.

The government’s economic managers, including Finance Secretary Cesar Purisima and Bangko Sentral Governor Amando Tetangco, credited the good governance platform of President Aquino for the upgrade. They said the S&P action would “trigger an influx of investments that, in turn, would fuel and sustain the economy’s stellar growth.” But it has been pointed out that S&P did not say that foreign direct investments would start flowing into the Philippines. As this paper’s editorial said: “What exactly do credit ratings mean? Here is what S&P has to say: Credit ratings are opinions about credit risk. S&P ratings express the agency’s opinion about the ability and willingness of an issuer [of credit instruments], in this case the Philippine government, to meet its financial obligations in full and on time. They are just one factor investors may consider in making investment decisions. Credit ratings are not guarantees of credit quality or of future credit risk.”

But before the desired foreign investments had arrived on our shores, disaster struck—the massive power failure that caught the government flatfooted, and knocked down the props of our economy as an investment destination.

In terms of risks, how can investors have confidence in the security of their investments when the government cannot ensure the stability of adequate electricity to fuel economic growth? Can there be growth without energy? A recurrence of the power outage in the few days until May 13 will not only bring the economy to its knees but also shatter all idle dreams of becoming Asia’s next economic tiger.

Power shortages, unless halted before Election Day, foreshadow even a possible collapse of the government.


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