The Philippine energy crisis (1989-1993)

by Former Philippine President Fidel V. Ramos, December 20, 2014
from Manila Bulletin 

“Our ‘Philippines 2000’ Strategic Program for one generation had Five Principal Points: (1) Peace and Stability (2) Economic Growth and Sustainable Development (3) Energy and Power Generation (4) Environmental Protection (5) Streamlined Bureaucracy….”

— FVR @ JCI Manila’s 64th Turn-Over Ceremonies, 16 January 2012

Our experience of a severe electric power crisis in 1989-1993 may be instructive to the incumbent Administration and to aspiring young leaders.

When the authorities admitted in 1991 that the power crisis would get worse, diesel-fired power barges and similar expensive generating facilities were procured as stopgap measures, leading to higher oil import bills and power rates. The economy continued to dive.

According to the Asian Development Bank (ADB), the power shortages led to a 6% decrease in Gross Domestic Product from 1989 to 1991.

During the worst years of the Philippine energy crisis electric power was rationed among industrial/commercial and residential users because 8-to-12-hour brownouts occurred daily in Metro Manila and in other population centers.

VOLUNTARY LOAD CURTAILMENT PROGRAM

Most industrial activities were stifled by the unstable power supply. Millions of workers, particularly in small enterprises, lost their jobs or livelihood as shops closed due to lack of business. Even large companies had to reduce working hours, or worse, shut down temporarily, despite their purchase of their own generator sets.

Some 1,600 firms were asked to participate in a Voluntary Load Curtailment Program (VLCP) so that their production shifts could be synchronized with the power availability schedules arranged on a rotating basis. The entire population nationwide was asked to observe Energy Conservation or “ENERCON” – with provincial governors, city/municipal mayors, congressmen and Cabinet members in the forefront of the information campaign.

As President, FVR was quite clear: put energy back to the center of the national agenda where it rightfully belonged. He asked Congress for a new law to create the Department of Energy (DOE), which resulted in the passage of Republic Act (R.A.) 7368 in December, 1992.

Other policy reforms followed. Innovative schemes such as the Build-Operate-Transfer law were expanded in the Ramos era to fast-track new power plants without the Government incurring massive public investments, except for right-of-way outlays.

The Expanded B-O-T law produced seven “fast-track” power projects – with an aggregate capacity of more than 900 megawatts – that put the country back on the road to sustainable economic recovery by December 1993.

The Government also pushed the exploration and development of natural gas reserves from the Camago-Malampaya field northwest of Palawan, and the promotion of other indigenous energy sources (geothermal, hydro and coal), and so-called renewable energy alternatives (solar, biogas, wind).

LESSONS LEARNED

Lesson 1: SPEED IS CRITICAL, THERE IS NO ROOM FOR DELAYS. That earlier energy crisis cost the Philippines billions of U.S. dollars in terms of lost industrial production, decreased export revenues, lost opportunities in investments and tourism, and incurred a higher debt burden.

The costs of indecision, postponements, protracted debates – even one single day of unnecessary delay – are more prohibitive than building the power plants themselves. This is true not only for energy but for all other public infrastructures.

Lesson 2: HANDS-ON LEADERSHIP AND POLITICAL WILL ARE VITAL. FVR led his Cabinet to work as a team. He put my best technocrats and action men to head the Department of Energy, the National Power Corporation, the Department of Finance, the National Economic and Development Authority, etc. – and all worked together to end the power crisis.

It was clear to all that the problems would multiply if remedial measures were not done at once. Prevention is always better than cure.

Lesson 3: THE POLITICAL LEADERSHIP SHOULD MAKE THE TOUGH DECISIONS BECAUSE THE BUREAUCRACY WILL NOT. With the trauma of the Bataan Nuclear Power Plant fiasco still fresh in their minds. The bureaucracy was scared to make the necessary moves to improve the power situation, and few among them wanted to put their careers on the line by making potentially controversial decisions.

It was up to the political leadership to show the way and to make the tough decisions.

Lesson 4: CAREFUL PLANNING IS ESSENTIAL, BUT USELESS WITHOUT ACTION-IMPLEMENTATION. We believed that energy security must always be on the national agenda. We gathered a team of experts to put together our 30-year Philippine Energy Plan which included the rehabilitation or retirement of old plants, the timetable for incoming programs, supply and demand projections, weather scenarios, and other such variables.

With such an Energy “Roadmap,” our line departments and agencies in other sectors could continue to implement programs and projects regardless of who eventually would succeed as their heads. The key is that action was