The Philippines will be up for a tough competition against neighbor-countries in Southeast Asia for the next round of estimated US$3.0 trillion energy investments in the region, but Energy Secretary Alfonso G. Cusi said the country preps on improving investment climate so it could corner a pie of that capital.
The US$3 trillion capital spend for ASEAN had been based on the calculation of the International Energy Agency (IEA) as to the scale of investments needed until 2040 to underpin sustainable energy future for the region.
In IEA’s assessment, a huge chunk of such investments may be channeled into renewable energy installations; energy efficiency and low-carbon technologies.
For the Philippines, Cusi noted that it is confronted with paucity of investments in the upstream petroleum sector compared to ASEAN neighbors; and will also need fresh capital flow into its power sector.
On the sphere of RE investments, the country is somehow ahead versus peers; and it is anticipated that the Philippines will regain appeal on such clean energy installations at the rollout of its Renewable Portfolio Standards (RPS) policy next year.
Energy efficiency is another area wherein the Philippines has been advancing – primarily on its policy direction of setting efficiency rating or standards not just for products, but also for establishments like buildings and even for key industries.
“We’ve been trying to attract investments in the country for energy and of course, we have hurdles but we’re trying to address them,” the energy chief said.
There had been roadblocks on investments flow in the energy sector this year because of the pandemic, but the DOE is still expecting some projects to be firmed up – especially for the power capacity additions that the country would be needing for its economic recovery.
Based on industry forecasts, the health crisis may delay the need for new power capacity by one to two years; but experts said new power plants are critically needed again in 2024-2025; hence, investment decisions would already need to be finalized between this year until 2021.
Unfortunately in the power sector, investment trepidation may turn out more menacing – latching on the fact that there are no new committed major power projects at this time; and players in the sector are also facing grim scenario of cash flow constraints due to decimated top and bottom lines.
A power plant project – primarily those of baseload and even mid-merit capacity – would need 3-4 years of gestation period before they could reach construction completion and commercial commissioning.
The bigger problem now is enticing new power plant projects that will seriously advance to implementation phase before the end of this administration to ensure that its legacy will not be a new round of power crisis.
Even Cusi is realistic enough to admit that it will be tougher investment decision for project sponsors to deal with at this point because of the economic impact that the lingering pandemic had inflicted not just on the operations of the energy firms but on the Philippine economy as a whole.
And while the country paces for economic recovery, energy will be its most important backbone to support gross domestic product (GDP) growth targets moving forward.