a new systems paradigm for the rural electrification
TRANSCRIPT
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A New Systems Paradigm for the Rural Electrification Program, Philippines
Fernando Y. Roxas, DBA & Andrea L. Santiago, DBA
The Philippines has pushed rural electrification for two decades. Recently, the
government achieved 100% electrification at the village level. Despite the significant
recent economic growth, poverty has increased in some areas. These are usually
agricultural and have many un-electrified areas. The multilaterals have launched
programs that couple electricity with livelihood projects. The authors argue this is
insufficient to guarantee sustainability.
A systems view of rural poverty suggests that several components must be designed to
work together. In addition to the electricity and livelihood, skills, attitudes, management
and markets must be incorporated to make a lasting impact on poverty.
Key Words: Rural electrification, poverty, social responsibility
Fernando Y. Roxas
Associate Professor
Asian Institute of Management
123 Paseo de Roxas, Makati City
Philippines
Andrea L. Santiago
Associate Professor
De La Salle University Manila
Taft Avenue, Manila
Philippines
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A New Systems Paradigm for the Rural Electrification Program, Philippines
Fernando Y. Roxas, DBA & Andrea L. Santiago, DBA
There is no one that would argue that electricity has a profound impact on the way
people live. The simple provision of light from an electric bulb alters the community‟s
way of living and the way people interact with one another. It is therefore understandable
that developing countries in Asia provide considerable effort and funding to electrify
even far-flung or last mile habitats.
More than just changing people‟s lives, governments have, for many years,
assumed that the mere provision of electric power will enhance rural incomes by virtue of
an increase in productivity as it provides a modern means of creating livelihood projects.
The experience in the Philippines shows that we may have to rethink this simplistic
approach. Perhaps more than electrifying homes, a more sustainable strategy would be
electrifying enterprises so the value of electricity is better appreciated. Certainly, the
number of families living in rural areas, without access to electricity in huge countries
like India and China justifies an innovative way of looking at the problem. After all,
electrification is not an end but a means to poverty alleviation.
Undoubtedly, poverty is the most serious problem facing the world and remains
the top of mind as evidenced by the 2009 poll conducted by GlobesScan for BBC World
Service. In that survey, 71% of respondents cited extreme poverty as the biggest global
issue (AFP, 2010). It is so that the United Nations in its Millennium Development Goals
has targeted a fifty percent reduction by 2015 (UN cited in Silva & Nakata, 2009). For
its part, the Asian Development Bank aims to benefit 100 million people in the Asia-
Pacific region by 2015 under its Energy for All partnership (Anonymous, 2009). Among
ASEAN, the Philippines registered a higher poverty incidence in the year 2000, than
Malaysia, Indonesia, Thailand and Vietnam (Reyes and Valencia, 2004).
The Philippine Economic Experience
Compared to the Tiger economies in Asia, the economic performance of the Philippines
has been less than admirable. It had tried the industrialization/export oriented strategies
of its neighbors but failed to achieve a significant measure of success. However, in the
wake of the subprime meltdown, its vibrant services sector and US$ 12 billion annual
remittance from overseas Filipino workers (OFWs) all around the world, has enabled it to
grow when its export oriented neighbors floundered with shrinking markets. In terms of
energy, the emphasis on services meant that the economy did not have to use a lot of
energy to support its growth. Figures 1 & 2 graphically illustrate the GDP growth over
the years and the declining energy intensity as a function of time.
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Figure 1. Philippine GDP Growth (expressed in %)
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
%
Source: Clean Technology Fund & Country Investment Plan, Philippines, 2009
Figure 2. Energy Intensity (Kg of Oil Equivalent/US$GDP)
0.15
0.16
0.17
0.18
0.19
0.20
0.21
0.22
0.23
kg of oil equivalent/US$GDP
Source: Clean Technology Fund & Country Investment Plan, Philippines, 2009
The banner year for Philippine economic growth was in 2007 when the economy grew by
7.3%, the highest for almost 30 years and not far off from Asia‟s high growth economies.
Besides the services sector (the Philippines is a main global outsourcing hub), the other
main economic performance driver was consumption, which contributed 56% of total
growth (Bird & Hill, 2009).
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However, the growth may have accelerated, but investments and labor force have not. In
fact, slow recovery in investment has occurred at the same time the country had enjoyed
its longest economic expansion. A possible explanation seem to be that, at least in the
case of the Philippines, poverty is less responsive to growth than in most other East Asian
economies. Is it reflective of the shortcomings of the country‟s poverty reduction
strategies and/or the boom-bust cycle that characterizes the economy (Reyes & Valencia,
2004)? Notwithstanding, the trickledown effect that the government was anticipating did
not materialize (Bird & Hill, 2009). This is the same conclusion reached by Balisacan
and Pernia (2002).
The latest Social Weather Station (SWS) survey on Hunger, Self-rated Poverty and Food
Poverty was conducted from December 5 to 10, 2009, using face-to-face interviews of
2,100 adults divided into random samples of 300 in Metro Manila and 600 each in Luzon,
Visayas and Mindanao (Lontayao, 2010). The results of the Third Quarter Survey found
that 53% or an estimated 9.7 million families consider themselves as "mahirap" or poor.
According to Dr. Mangar Mangahas, SWS President, the new poverty reading is from the
87th in a series of national surveys that started in April 1983, when the self-rating method
was first applied nationwide by the Development Academy of the Philippines. The
original survey found 55% of household heads calling their families poor. The starting
point of 55% and the latest point 53% are statistically the same (Mangahas, 2009).
The Overall Hunger rate increased by 11 percentage points in Metro Manila, from 16 %
(394,000 families) in October 2009 to 27% (665,000 families) in December 2009; by
eight points in the Visayas, from 20% (750,000 families) to 28% (one million families);
by over six percentage points in Mindanao, from 18% (755,000 families) to 24.5% (one
million families); and by two percentage points in Luzon (net of Metro Manila), from
19% (1.6 million families) to 21% or about 1.7 million families (Lontayao, 2010).
Clearly, the poor in the Philippines have not benefited much from whatever economic
gains statistical data has registered.
It should also be stated that certain areas of the archipelago have poverty levels which
have taken root and may be impervious to macro level gains in productivity. The
National Capital Region or Greater Manila area accounts for 55% of the national output,
and therefore employment opportunities elsewhere are limited. The “Family Income and
Expenditure Surveys” produced by the National Statistics Office revealed that between
2003 and 2006, poverty increased marginally, even when growth was quite strong (Bird
& Hill, 2009). The difference in the results revealed that poverty incidence increased
from 30% to 33% even as GDP grew at 5.4%.
In the Bicol region located in Southern Luzon, poverty incidence in excess of 40% was
registered. Poverty is also endemic in Eastern Visayas, Western and Central Mindanao.
The worst cases are found in the Autonomous Region of Muslim Mindanao where
poverty incidence approaches 70% (Bird & Hill, 2009). It is also highest in the
agriculture sector which experienced the slowest poverty reduction. The rural poor
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account for 77% of the segment identified as poor. Labor productivity is also the lowest
in this sector (World Bank, 2000).
Incidentally, it comes to no surprise that many of these marginal areas do not have access
to electricity. In these off-grid areas, consumers have a per capita income of US$2 a day.
Obviously, these consumers cannot pay the true cost of generation and so the regulatory
framework provides for rates based on affordability (IFC, undated).
It is apparent in the Philippines at least that while electricity positively influences the
incomes of the poor through growth, direct benefits are unclear for the poorest of the
poor. This suggests that a minimum income level and complementary facilities are
required to benefit from electricity (Ali & Pernia, 2003).
The Philippine‟s Electricity Infrastructure
The country‟s main electricity backbone is in reality made up of three main grids serving
the three major islands of Luzon, Visayas and Mindanao. These grids are not only
geographically separated, but each having their own markedly different resource base and
power markets. Figure 3 illustrates the current grid configuration.
Figure 3. The Philippines‟ Power Grids
Luzon (2007) Installed capacity: 11,907 MW
Peak demand: 6,674 MW
Barangayelectrification: 98%
Per capita GDP: P14,670
Poverty rate: 30.2%
Share of PH economy: 65.9%
Main source of power generation: 43% natural gas
Visayas (2007) Installed capacity: 1,832 MW
Peak demand: 1,176 MW
Barangayelectrification: 98%
Per capita GDP: P11,281
Poverty rate: 41.8%
Share of PH economy: 16.5%
Main source of power generation: 71% geothermal
Mindanao (2007) Installed capacity: 1,933 MW Peak demand: 1,204 MW
Barangayelectrification: 93% Per capita GDP: P10,383
Poverty rate: 49.9% Share of PH economy: 17.6%Main source of power
generation: 50% hydro
Distribution Utilities
Electric Cooperatives 119
Private Dist. Utilities 18
LGUs 2
Barangay Electrification, as of 6/03
No. of Brgys. Energized 37,246
No. of Remaining Brgys. 4,753
Source: Clean Technology Fund & Country Investment Plan, Philippines, 2009
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The main island of Luzon has roughly two-thirds of total grid-connected capacity (11,907
MW), with more than 80% of generation output from fossil fueled plants. Visayas and
Mindanao each have about 1,800 MW of capacity, with generation dominated by
renewables: geothermal provides 71% of actual generation in Visayas and 12% of
generation in Mindanao, while hydropower provides 50% of generation output in
Mindanao. It is also apparent that Mindanao has the highest poverty incidence and a
disproportionately small share of the economic activity in the country.
Further, there is limited interconnection capacity between Luzon and Visayas that allows
some sharing of reserves and electricity produced from Luzon‟s natural gas plants and the
Visayas‟ geothermal facilities. Plans for interconnecting Mindanao to Visayas has been
shelved and deemed economically infeasible.
The upside in the Philippines is that demand is foreseen to continue to grow, not only
because of the current unserved demand in Visayas and Mindanao (load shedding is on-
going) but also because per capita consumption in the country is comparatively low when
compared to some of its ASEAN neighbors. Table 1 shows the 2005 per capita
consumption of selected countries.
Table 1. Per capita electricity consumption (2005)
Country kWh/capita PPP
$GDP/capita
Electrification Rate
(2002)
Vietnam 598 2,100 79.6
Thailand 1,988 6,730 91.1
Philippines 578 3,200 89.1
Indonesia 509 3,040 52.5
China 1,783 4,100 99.0
Source: World Bank World Development Indicators Database, IEA World Development
Indicators (cited in Source: Clean Technology Fund & Country Investment Plan,
Philippines, 2009)
The downside is that majority of the envisioned greenfields to 2014 are fossil based
generation, with coal, natural gas and small diesel plants contributing 84% of new
capacity. Table 2 shows the various fuel alternatives that the Philippines could employ to
meet its demand for electricity under various scenarios of GHG emissions. The medium
scenario assumes a 10% reduction due to energy efficiency improvements while the low
carbon case assumes a 15% demand reduction and a more aggressive utilization of RE
technologies. The figures also illustrate that even at the most aggressive low carbon
emission scenario, coal fired generation would still dominate the capacity mix. Clearly,
efforts are required to increase the share of RE in future projects.
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Table 2. Alternative Fuel Scenarios & GHG Emissions
Power Sector
Scenarios
Fuel Source
2030 Installed
Capacity in MW
(Baseline)
2030 Installed
Capacity in MW
(Medium)
2030 Installed
Capacity in MW
(Low-carbon)
Coal 26,218 17,291 6,173
Diesel/Oil 756 756 1,256
Natural gas 1734 4,754 4,034
Hydro 3170 4,209 5,589
Geothermal 2168 3,108 3,304
Wind 111 252 4,612
Biomass 50 179 2,127
Solar 1 1 2,001
Total 34,208 30,550 29,095
Source: Clean Technology Fund & Country Investment Plan, Government of the
Philippines
Under the existing economic alternatives, coal is still perceived as the least cost option
for many developing countries like the Philippines. While the country continues to
experience outages, it is hard to imagine any level of energy security without having hard
megawatts being added to the major grids every year. In terms of available capacity to
service the demands of the entire archipelago, the country does not compare well with its
Asian neighbors. Thailand has 33,000 MW for its 58 million inhabitants. South Korea
has 50,000 MW for a population of 35 million while the GOP is trying to make do with
15,000 MW for 90 million citizens1.
Even in terms of managing the nagging perception of “having one of the most expensive
electricity rates in Asia,” the country needs to have a certain level of “over capacity” in
order to have any chance of driving generation prices down. Tight reserves are not going
to yield more competitive prices.
The Philippine Rural Electrification Program
Empirical studies and intuitive appeal highlight the role of energy in economic
development. The International Energy Agency has underscored the high correlation
between access to energy and development (Silva & Nakata, 2009). Over 2 billion
people all over the world live with no electricity and they continue to subsist below the
poverty line (UNDP cited in Haayika, 2006).
In cognizance of this, rural electrification has been a government priority for two decades
so much so that the Philippines has finally achieved 100% electrification of the 41,980
1 FGD on Infrastructure: Power and Water by the Joint Foreign Chambers of the Philippines,, AmCham
Hall, 17 November 2009.
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barangays or villages in 2009. To accomplish this, the government has had to mobilize a
lot of multi- and bilateral support as well as programs from the major IPPs operating in
the Philippines (Anonuevo, 2009).
According to the National Electrification Authority, the government has spent ₱49.3
billion (US$ 1 billion) or ₱2 million for each barangay from 2001 to 2009. Of that
amount, ₱37.64 billion came from loans and ₱11.68 billion from subsidies (Anonuevo,
2009).
Historically, a great majority of the new barangays were connected via line extensions
from the existing distribution network. Under this approach, last mile connections
became harder and harder to reach. Moreover, as the lines became extended longer and
longer, quality became problematic. Increasing losses and subsidies limited what could
be achieved. Under this metric, only the existence of a tapping point within the barangay
was recorded, while utilization and the number of actual household connections were
ignored.
Similar to the dissonance noted in the impressive GDP growth, full electrification of the
barangays did not impact on poverty incidence mitigation. Clearly, a more pro-active
stance on providing electricity is needed. In 2003, ADB commissioned a study to find
out why some “New and Renewable Energy” (NRE) projects failed to achieve their
desired objectives. Among the areas that need attention would be:
1. Lack of stakeholder mobilization and beneficiary participation
2. Institutional problems, including unsuitable management practices
3. Technical problems, including lack of spare parts for operation & maintenance
and use of obsolete technologies
4. Financial problems, such as high initial and maintenance costs, or high tariffs for
consumers
Asian Development Bank (ADB) Senior Energy Specialist, Yongping Zhai explains
further, “To ensure installed NRE systems are sustainable in the long-term, it is important
to also develop renewable energy-based livelihood opportunities.” Sample of these
undertakings could be rice mills and mini-ice plants for cold storage of fish. Provision of
skills and training for operation, maintenance skills and market access are also important
components of these projects.
In 2009, the WB approved a US$40 MM loan to the Development Bank of the
Philippines for the Rural Power Project (RPP) aimed at reducing poverty and improving
the quality of life of 10,000 rural households in hard-to-reach, isolated and poorest areas
of the country, particularly in Mindanao. The RPP will target households, use more
public-private sector partnerships, emphasize rural electric cooperatives and upgrade
these distributors to become financially viable and operationally efficient (US Fed News).
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At this point, one may ask if perhaps this is the key to coupling provision of electricity
with poverty alleviation. Certainly, it would provide sustainability of the projects
financed by these loans. Moreover, areas with high poverty can be identified and focused
on. It would also be useful to rethink the nature of the problem at hand.
A Systems View of the Rural Electrification Problem
In practical terms, people value electricity not for electricity itself, but rather for the
services that electricity enables. This may be one reason why the provision of light,
whether by line extension or PV equipment, did not do much help for those earning US$2
per day. For these people, something worth having was something that could augment
their meager incomes. This problem is not just those of people living in marginal areas
where poverty has taken deep roots. It should be viewed as a grave problem for all of
society in general. Figure 4 is a simple causal loop diagram showing how the provision
of electricity is only a small portion of the rural poverty.
Figure 4. Causal Loop Diagram of Rural Electrification Problem
Economic Activity
Rural Poverty
Electricity Infrastructure
Urban Migration Rural
Investments
Urban Investments
Congestion
Quality of Life
Urban Blight
R
R
B
o
o
o
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Rural poverty is a phenomenon caused by so many factors. Some of these factors are
natural (lack of natural resources or poor soil for agriculture) and some of them are man-
made like the civil strife and violence in some areas of Mindanao. Whatever the cause,
the end result are low levels of economic activity. The topmost loop in Figure 4 is a
reinforcing vicious loop where more poverty causes more depressed economic activity.
As rural poverty intensifies, urban migration accelerates. When there are few economic
alternatives in the provinces, young people most specially, move to the cities where most
of the employment is available. As more and more people flock to urban areas, the
burgeoning cities become more congested. Most governments faced with the same
situation would do the same thing – build more roads, more mass housing, more ways to
accommodate others now flocking to the cities for jobs and housing. This spate of public
spending on urban projects not only attract more migrants from the provinces but also
decrease the funds that could have been use to develop the depressed rural areas. This
cycle leads back to more acute rural poverty.
Congestion is a pervasive system state. Congestion refers not only to the overcrowding
in the cities but many other related phenomena. The crawling pace or rush hour traffic in
Metro Manila and other Asian mega cities like Bangkok and Jakarta not only drains
productivity but contribute to the deteriorating quality of life. A year 2000 study by the
National Center for Transportation Studies indicate that the losses due to congestion in
Metro Manila alone was estimated to be ₱100 billion per annum, in 1996 prices or about
4.6% of GDP (Philippine Government, 2009).
Congestion is also seen in the transmission bottlenecks resulting from the need to bring
all the power into the major load centers. The reliability of the Luzon power grid is
threatened by several chokepoints which will require expensive transmission capacity to
rectify. Transmission capacity is made more expensive by the Right-of-Way problems
due to residential and commercial property occupying the suburbs of major cities.
One is reminded of the most recent flooding in Manila due to typhoon Ondoy
(international name Ketsana), believed to be the worst flood to hit Manila in three
decades. More than 460 people died and damage caused by the calamity was estimated to
be $100 million. Most people believe that human settlements along floodways and
natural drainage ways exacerbated the damage caused by the typhoon.
Many people think that killer quakes are increasing in numbers. The truth is that more
and more people are crowding into cities which are susceptible and poorly designed
structures against earthquakes. “It's not the number of quakes, but their devastating
impacts that gain attention with the death tolls largely due to construction standards and
crowding”, said Paul Earle, a seismologist at the U.S. Geological Survey (Borenstein,
2010).
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The Haiti quake will likely set a modern record for deaths per magnitude of earthquake
"solely as a function of too many people crammed into a city that wasn't meant to have
that many people and have an earthquake," said University of Miami geologist Tim
Dixon. According to University of Colorado geologist Roger Bilham, “Of the 130 cities
worldwide with more than 1 million population, more than half are on fault lines, making
them more prone to earthquakes” (Borenstein, 2010).
Thus the bottom loop in the figure shows that increasing congestion contribute to urban
blight. Congestion breeds not only the above but rising criminality, air and water
pollution and other symptoms of degenerating environs. Thus, rural poverty is a problem
that affects everyone, even those who live in the cities! The bottom loop is a balancing
loop because theoretically, congestion eases when the unfortunate circumstances in the
cities approaches those in the rural areas.
It should be noted that the objective is not to stop urban migration. The intent is merely
to provide a viable economic alternative to those who are content with rural life, provided
that abject poverty is mitigated. Albeit, the Philippines exhibit one of the fastest
urbanizing trends in East Asia (Philippine Government, 2009).
Finally, the provision of an electricity infrastructure, or any other infrastructure like roads
or water systems, is just a component of the whole system. The absence or inadequacy
thereof contributes to the slowdown in economic activity, leading to further increases in
rural poverty.
A New Paradigm for Rural Electrification
The refocus from just providing electricity to creating livelihood projects as proposed by
the ADB and the World Bank are real steps in the right direction. The effectiveness of
this approach was already illustrated by Fabio Rosa in Brazil (Bornstein, 2005).
However, from a systems viewpoint, this link is still inadequate to ensure sustainability
and mobilize resources in the magnitude required to make an impact on poverty all over
the rural areas. These factors are by no means new. They are in fact necessary in any
successful enterprise. What is new is the area of application and the emphasis on the fit
of each component with one another. Figure 5 shows the graphical framework.
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Figure 5. A New Paradigm for Rural Electrification
Livelihood. An inventory of the most promising livelihood projects in the area.
The entities who can do this effectively are locally based NGOs and the Local
Government units. In addition to the examples cited by ADB, equipment for more
efficient drying of fish would be appropriate for many marginal fishing communities.
Mechanized dryers would not only improve productivity but also the quality of the dried
fish produce. In the same vein, pumps can provide valuable irrigation in areas of shallow
water tables. It is not necessary that the livelihood project is something new. The
agricultural sector in the Philippines is plagued by low productivity. The use of
electricity and some form of mechanization to raise farm incomes is really the objective.
Skills and Attitudes. Project ownership is absolutely essential to the success and
sustainability of the project. There is simply no substitute for this. It is also quite useful
to have the community donate part of the “capital” in terms of token funding and or labor
during construction. Basic routine maintenance skills must be transferred to the
community. Local non-governmental organizations (NGOs) can be trained to make
specific assessment, to identify project champions and to conduct the required training
when necessary.
Roy Bunker has trained illiterate grandmothers how to assemble and maintain PV
equipment in his “Barefoot College” in Tilonia, India. Using color coded instructions and
without help from urban professionals, Bunker‟s „solar engineers‟ have installed 8,700
solar units, generating 500 kilowatts per day, and manufactured 4,100 solar lanterns
(WIPO, 2009). Another advantage that can be leveraged is the natural entrepreneurial
Sustainability Technology
Livelihood
Skills &
Attitude
Management &
Markets
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flair of the Filipinos. The Global Entrepreneurial Monitor (Madarang and Habito, 2007)
reveal that 73% of Filipinos believe that they possess sufficient skills to start a business.
It is also important that project leadership be removed from the government entity.
Unfortunately, the attitude that “if it comes from the government, it must be free!” still
exists. It is not even confined to rural areas and certainly, some rural electrification
projects have been victims of this mentality. That is also probably why some project
collection rates are low even if prices were set against existing avoidable costs, e.g., cost
of kerosene for lamps.
Technology. This is perhaps the most exciting part of the development exercise.
There is a wide range of alternative Renewable Energy (RE) technologies suitable and
feasible for distributed generation on kilowatt range. Not only are the technologies
improving in reliability and flexibility, but costs are dropping as volumes increase and the
numbers of competing suppliers multiply. The Philippine Department of Energy (DOE)
must work with local entities, particularly schools and engineering colleges to provide
services required for proper installation, upgrade and maintenance of all equipment.
Beyond the tropical sun and obvious PV uses, the Philippines has a lot of potential when
it comes to RE applications. Consider the following:
1. 2nd
largest geothermal power producer in the world
2. Largest wind power potential in SE Asia (700 MW)
3. SE Asia‟s largest solar manufacturing hub (400 MW of solar cells)
4. 1,780 MW of potential hydro capacity from 900 sites
5. 235 MMBFOE biomass resource potential
Actually, the Philippines, by force of circumstance, is an early adaptor of RE
technologies for rural projects. It may not be as apparent to other nations but the
Philippines is an archipelago of 7,000 islands, or think of Indonesia with 17,000, there is
just so much you can do by extending lines. But the paradigm is not only for archipelagic
settings. Chile used off-grid solutions to achieve 90% rural coverage while Guatemala
utilizes sugarcane bagasse fuel to supply 10% of its energy needs (Conti, 2008). More
importantly, the Philippines is one of the few countries in the world where RE accounts
for the largest share or 43% of total primary energy supply (Philippine Government,
2009). Based on total Clean Development Mechanism (CDM) registered projects, the
Philippines ranks 6th
globally, with 40 projects as of October 2009 (The Philippine Star,
2009). In terms of size, 78% of these projects are considered small-scale applications.
Institutional and regulatory support is also vital for success. In the late 2008, the
Philippine Government signed a new RE Law (RA 9513, 2008). It is the first in
Southeast Asia that has such comprehensive renewable energy legislation, and there are
hopes that it may become a blueprint for other countries in the region. The new law
intends to make RE investments more attractive by providing a number of perks:
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a. 7 year income tax holiday
b. 10 year duty free importation of RE machinery, equipment and materials
c. Special realty tax rates
d. Net operating loss carry-over (next 7 consecutive years)
e. 10% corporate tax rate
f. Tax exemption of carbon credits
g. Tax credit on domestic capital equipment and services
h. Duty free importation and VAT exemption on all types of agricultural inputs,
machinery and equipment, for feedstock producers.
i. Feed-in tariffs and net metering for RE
Today, with the expected rising energy prices, RE projects are booming. Ongoing is the
Solar Power Technology Support which targets agrarian reform communities and is a 3-
year program with Spanish government funding. The aim is to introduce PV applications
for rural and agricultural enterprises (DOE, 2009). Recently, US based Clenergen Corp.
announced its plan to work with the government to put up over 500 MWs over the next
five years that use cultivated feedstock and agricultural wastes as biomass for gasification
purposes. The units to be put up will range from 0.5 MW to 2 MW biomass units
(Gatdula, 2010).
Management & Markets. These two components hold the key to the enterprise‟s
sustainability. It is also the most difficult to put together, especially for projects in
economically marginal areas and is probably the most essential to long-term
sustainability. It is also the most difficult to cultivate for a rural based project.
However, if we accept the paradigm that rural development is a pressing concern beyond
the geographical boundaries of where we live, then rural development is an ideal social
responsibility undertaking for many corporations. Credible non-governmental
organizations (NGOs) can package these rural development projects and look for
companies who would be willing to take them on as their corporation‟s social
responsibility agenda. The financial incentives under the RE law can best be leveraged
by companies who know how to run businesses.
In a nutshell, the suggested strategy requires the linking of various civil organizations –
grass roots NGOs, academe, Chambers of Commerce & Industry, professional & civic
organizations to design, develop and link the livelihood programs in marginalized areas
with company corporate social responsibility (CSR) efforts. If done well, this could far
surpass the UN Millennium Project estimates of $81 to $150 a month for simply
electrifying rural Philippine households.
An efficient starting point would be to tap the network of cooperatives already engaged in
some form of economic activity for their member-beneficiaries. These could be the
community based NGOs that this intervention needs. Table 3 from the Cooperative
Development Authority (CDA) lists the type of activity and the number of cooperatives
engaged in the activity.
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Table 3. Philippine Cooperatives registered with the CDA
TYPE OF COOPERATIVE NUMBER
Savings and Credit 4,812
Consumer (Public & Private Offices and Schools) 1,369
Producers 1,409
Marketing 911
Services (including provision of electricity) 1,806
Agricultural and Non-Agricultural 60,000
Source: Manila Bulletin, 19 February 2009
Major Challenges
Like all departures from the old ways of doing things, the implementation of Rural
Electrification via the suggested paradigm is not going to be easy. In the first place, the
first change would be to replace “Electrification” with “Development.” Electrification
puts too much emphasis on “electricity,” which is only a means to an end. The end goal
is really uplifting the living conditions of those in the country side.
Perhaps, the easier way to think about is electrifying “enterprises” rather than
“households”. As the income levels in the community rise, there will be a demand for
electricity. The challenge of supplying the households, after the enterprise, becomes one
of expansion of the existing system. Serving this demand is sustainable because
incremental income streams are created by the enterprise.
The second challenge is the “silo mentality” among government units. The DOE might
balk at being responsible for anything that goes beyond “energy”. Likewise, local
governments and national line agencies do not always work well together. There will
always be issues of „turf‟ among the units in the bureaucracy because that is the way the
government is set up. That is the main reason why the private sector proponents, most
specially the local NGOs, should take a very active role.
Finally, it is easy to say that many of these are being done already. It should be stressed
however that understanding systems require that these components be linked
operationally, not separately, by someone else, or at another space and time.
References:
AFP (2010, January 18). Poverty is world‟s biggest problem – BBC poll. The Philippine
Star, A27.
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