with Litz M. Manual-Santana, Managing Director, PIPPA, Philippines
Litz M. Manuel-Santana, Managing Director of Philippine Independent Power Producers Association, Inc. (PIPPA), discusses the importance of strengthening investment in renewable energy, such as hydro, wind, biomass and solar power, and why the Philippines has such a positive business environment.
You have been a member of the Board of Trustee of PIPPA since 2000 and have been managing director since 2011. What have been the main milestones and achievements of PIPPA so far?
PIPPA is now recognized as the association of Philippine independent power producers. As an IPP association, it is the voice of the independent power producers. As a professional organization, PIPPA is working to provide adequate, reliable, and competitively-priced supply of electricity to Filipino homes and industries. It is currently working with the government and the regulatory agencies on several initiatives, such as incentives for tax holidays for new investment in power generation.
Which are the priority issues on PIPPA’s agenda today?
PIPPA has always been an advocate of a more robust electric power industry through an empowered independent power production industry, and remains committed to its core objectives: to promote the common interests and growth of the independent power production industry and their consumers, as well as those of the related and support industries; to promote a forum for those in the power sector to share and discuss common concerns and other issues, and address them in a unified way; and to develop a constructive and closer relationship between the members of the association and pertinent government institutions.
PIPPA’s priority issues include: resolution of deferred value added tax with the Bureau of Internal Revenue (BIR); resolution of various issues with the Philippine Electricity Market/Wholesale Electricity Spot Market (PEMC/WESM); resolution of transmission issues with the National Grid Corporation of the Philippines (NGCP) and strengthening of regulatory agencies.
In its current energy plan the Filipino government pledges to double the country’s energy capacity by 2030. Do you think this target is achievable?
It is achievable, but first, the government should improve the permitting process. Before building a power plant, companies should have to secure an Environment Compliance Certificate (ECC) from the Department of Environment and Natural Resources (DENR); this should take as little time as possible. Once we see an improvement in this area, I have no doubt that the government will be able to reach the capacity it has pledged.
It is important to mention at this point that things can go very slowly in the Philippines. One reason for this is the fact that we have elections every three years. For long-term construction projects such as the ones carried out by our members, this can be problematic, as a new local leadership might result in new requirements, even if the correct permits have already been collected. The bureaucracy has to be streamlined.
There has been a recent shift in policy regarding disconnection for non-payment. Is the industry satisfied with this change of policy?
Both the government and the regulatory agencies need to to look at the best way to strengthen the financial viability of electric cooperatives: it benefits no one to let them continue to take on more and more debt. If the government takes steps to improve the situation of these cooperatives, it will give a very positive signal to the rest of the industry.
There is a growing need for the Philippines to cut its dependency on imported coal and fossil fuels. How committed to self-sufficiency are your members?
Some members are now using local coal, such as DMCI holdings, which has its own coal mines. Today, the DOE is looking into other coal mines in North Luzon and in Mindanao. The resources are there; we just have to make the best of them. As an alternative, we are also pushing for the move toward more renewables: in other countries, hydro, wind, biomass and solar power are the future of the industry, but here in the Philippines, we can already consider them part of our present. Five thousand four hundred thirty nine MW or 33.25 percent of our installed capacity is already from renewables.
As the voice of the large generators in the Philippines, PIPPA represents members that are very diverse: home grown Filipino companies, foreign investors, companies operating coal-fired power plants, and others working exclusively in geothermal. What are the common interests of your members?
The common objective is to help our government lower electricity rates. At the end of the day, we all want a fair and competitive business environment.
For potential investors, what are the competitive advantages that the Philippines power sector offers compared to other markets in the region?
The industry is ripe for development, thanks in large part to the incentives the government is offering to encourage manufacturers to move their operations to the Philippines. There is also a large domestic market of around 100 million inhabitants. When you add to this a positive overall business environment, you see that it makes sense to invest in the Philippines.
The Philippines has a vibrant power market composed of big conglomerates and smaller local players, both with huge appetites to be strong in the power sector. All of the big multinational industry players are either here already or about to step in: together, these elements combine to make a very positive business environment.