Correction issued: Aug. 6, 2013
For as long as she can remember, electricity has been a luxury to 39-year-old Candace Evangelista. Living in the Philippine capital of Manila, the small-business owner remembers the days when her parents would struggle to prepare food and get household chores done with a sporadic power supply. More than 20 years later, she faces the same tribulations. “Now that I am a mom myself — that’s when you really feel it, how inconvenient it can really be.” Preparing meals for her family is a tough job without electricity. Cleaning up afterward is another ordeal. Her business, a tutorial center for schoolchildren, suffers as well. In the summertime, it becomes a sauna when the power fails, so enrollment plummets. The center has a diesel-powered generator for use during scheduled outages or brownouts, but it’s becoming expensive to run.
Like most Filipinos, Evangelista never dreamed that the rolling power outages that crippled the Philippines in the early 1990s under then President Cory Aquino would still bedevil the country. But they have, raising concerns about the sustainability of one of Asia’s fastest-growing economies. In May, at the start of a sweltering summer, Luzon — the Philippines’ largest island and the hub of the nation’s commercial and industrial activity — suddenly blacked out. Six power plants failed. Last month, Albay province’s 1.2 million people lost power for 39 hours because the local electricity provider, Albay Electric Cooperative, failed to settle its bill with the national power-grid operator. The $93 million sum had been outstanding for 15 years. On Friday, a brownout was announced throughout Misamis Occidental province (as has been done over 200 times since January). The next one: Pampanga, one of the richest provinces, which will lose power on Wednesday for eight hours. Consumers suffer and so do businesses that have to pay workers when machinery and premises are sitting idle.
The Philippines, a 7,107-island archipelago, has around 30 million more people than Thailand, but doesn’t even produce half the electricity. That shouldn’t be the case. In terms of geothermal-power capacity, the Philippines is second only to the U.S., but transmission and distribution failures, the lack of domestic energy production and a challenging geography have meant a perennial power problem. The dependence on imported fuel hasn’t helped either. The government does not, in general, subsidize fuel, which means that electricity tariffs are set by the market and are thus among the highest in the region. Throw aging power plants and rogue debt-ridden cooperatives into the mix, and the likelihood of blackouts becomes virtually a hundred percent.
Then ambitious Electric Power Industry Reform Act (EPIRA) of 2001 was meant to provide some relief, but its effectiveness has been negligible. The law mandated the privatization of state-owned power enterprises, ensuring access to affordable electricity and allowing “a regime of free and fair competition,” among other things. However, an inadequate legal framework — like weak competition laws, which have resulted in the abuse of market power — and an ineffective regulatory body have made it a toothless piece of legislation. “Everything was supposed to happen at a much faster pace than what has actually happened,” Sohail Hasnie, an energy specialist at the Asian Development Bank tells TIME.
The urgency stems from the country’s impressive rates of growth (the Philippines’ GDP growth rate of 7.8% for the first quarter of 2013 was the highest in Asia), which has driven up the need for energy. Secretary of Energy Carlos Jericho Petilla tells TIME that the power supply is “just keeping up with the demand” and that the situation will improve in 2015 when a slew of larger power plants come online. The country has also come up with short-term restorative measures, which should help tide over supply shortages for the next few months — last month, for instance, $100 million was earmarked to subsidize modular electricity-generator sets for regional cooperatives. And despite its promarket stance, the government may amend EPIRA to allow it to intervene in the sector as need arises. Petilla says the government would like to have its own power-generation facilities, for instance, so that it can bridge power shortfalls, when needed. “That stopgap ability is going to be expensive; no private sector [investor] will be willing to take that [on].”
But it’s the long-term, rather than near-term, that gives real cause for concern. According to a recent Goldman Sachs report, the investment needed to set up modern power generation in the Philippines over the next few years totals some $46 billion. Yet investors are shying away because, in the words of Control Risks analyst Stephen Norris, “politically connected domestic conglomerates” hold sway and nepotism rules. Foreign investment is capped at 40%, another inhibiting factor. “There are not many takers,” Norris says.
Until there are, Filipinos will struggle on with what has become a way of life. At a speech on June 23, 1992, President Cory Aquino reflected on development in her country. “The self-respect of the Filipino nation,” she said, would be reinforced by strong institutions “ensuring that our infrastructure, specifically our power-generation facilities, are adequate to cope with increasing demands of industry.” It is now up to her son and current President, Benigno Aquino III, to deliver on those aspirations. Till then, Evangelista says, “we’re bracing ourselves,” and her kids are learning to cope with the lack of stable electricity, just as she did. “It’s going to be part of their daily lives as they grow up.”
An earlier version of the story incorrectly stated that the Philippines’ population was 30 million fewer than that of Thailand, when in fact the inverse is true. The text has been amended accordingly.