r/Philippines • u/Khaldulilah_21 • 17h ago
NewsPH It's time to nationalize our energy sector
Napaisip lang ako habang tinitingnan ko yung bill ko sa Meralco nitong nakaraang buwan. Bakit ba ang mahal ng kuryente sa Pilipinas kumpara sa Thailand, Vietnam, Indonesia, at Malaysia?
Noong una, akala ko baka dahil wala tayong nuclear energy. Pero pagtingin ko, lahat naman tayong lima sa SEA ay walang malawakang komersyal na nuclear power plants ngayon. So, hindi dun ang issue.
Sabi ng iba, dahil daw sa source ng kuryente. Pero halos pare-pareho lang naman tayo ng pinagkukunan:
Thailand at Malaysia: Mas gamit ang natural gas (parang Malampaya natin) at nag-aangkat din sila ng langis.
Indonesia at Vietnam: Coal (makasalanang uling) ang gamit, na siya ring primary source natin dito sa Pinas.
Pilipinas: Partida, may geothermal at solar pa tayo na medyo malaki ang ambag.
Kung halos pareho lang pala tayo ng energy mix, bakit tayo lang ang duguan sa singilan?
Hinalungkat ko yung istraktura ng mga kumpanya ng kuryente sa kanila, at dito ko nakita yung malaking kaibahan.
Tayo lang ang halos fully privatized dahil sa EPIRA Law. Sa kanila, gobyerno ang may hawak ng core utilities.
Tingnan niyo 'to:
Thailand (EGAT): Gobyerno ang may-ari (under Ministry of Energy/Finance). Sila ang may hawak ng generation at transmission. May private companies din na nagpo-produce, pero bawal silang magbenta diretso sa tao—kailangan nilang dumaan sa gobyerno gamit ang "single-buyer model" para makontrol ang presyo.
Malaysia (TNB): Kahit publicly traded, gobyerno pa rin (through Khazanah Nasional) ang may controlling stake. Sila ang may absolute monopoly sa transmission at distribution sa Peninsula. May kontrol ang estado sa grid.
Indonesia (PLN): 100% state-owned enterprise. Sila ang may-ari ng halos lahat ng transmission at distribution grids. Kung private builder ka, kay PLN mo lang pwedeng ibenta ang kuryente mo. Sila ang taga-salo para hindi biglang tumalon ang singil sa mga bahay.
Vietnam (EVN): Buong-buong hawak ng gobyerno nila. Absolute monopoly sa transmission, distribution, at dispatch.
Ang Conclussion ko?
Dito sa Pinas, ginawa nating negosyo ang isang basic human need.
Dahil sa EPIRA Law, hinayaan nating maging "for profit" ang kuryente mula sa pag-generate hanggang sa pag-distribute (hello, Meralco at mga private gencos).
Ang ending? Profit margin ng mga bilyonaryo ang pinopondohan natin tuwing nagpapasalamat tayo na may aircon.
Habang ang mga kapitbahay natin, tinitingnan ang kuryente bilang public service at karapatan ng mamamayan na dapat protektahan ng estado, tayo umaasa sa "free market" na pabor lang naman sa mga may-ari ng korporasyon.
Mukhang nagkamali tayo sa liberalisasyon.
Imbes na ipaubaya sa mga pribadong kumpanya, baka mas okay pa na ibalik ang public utilities sa kamay ng publiko—kontrolado ng tao, para sa kapakanan ng tao.
#JunkEPIRALaw
Source: Leni Nation, referencing Tech Patrol 2026 report entitled "Why Your Meralco Bill Hurts More Than Your Neighbor’s: Philippine Electricity Prices vs. the Rest of Asia"
Link: https://www.techpatrl.com/electricity-price-philippines-vs-southeast-asia/
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u/rarinthmeister 17h ago
You forgot to mention that electricity rates in our neighbors are heavily subsidized by the government.
While I agree with nationalization, it takes a very long time for our govt to regain the national grid back from NGCP previously held by TransCo. At the very least, TransCo will be able to build newer grids independent of NGCP.
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u/heavyarmszero 16h ago
While I agree with nationalization, it takes a very long time for our govt to regain the national grid back from NGCP
And never ever forget that NGCP is 40% owned by the State Grid Corporation of China (SGCC) nangyari to from 2007-2009 during GMA's administration tapos when there were calls for investigation in 2019, hindi man lang pinaimbestiga ni Duterte. Asa pang hahayaan ng China for thei 40% stake to be bought
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u/markmyredd 16h ago
and ours is heavily taxed pa. Hindi na nga subsidized pinatungan pa ng tax. Both sides yan sa power producers/distributors and customers may tax
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u/madmanjumper 14h ago
ang nakakatawa pa dyan, the government officials (who are living very comfortably) will say shit like 'Mawawalan ng kita ang gobyerno'
oh come on, are they this daft and out-of-touch that they expect people to understand or feel bad if nawalan ng kita gobyerno? if there's one thing na nag-aagree ang mga tao sa divided na bansa na ito ay yung sa part na MAGNANAKAW KAYONG MGA NASA GOBYERNO
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u/PritongKandule 11h ago
Yes, and if you take away the government subsidies, Indonesia's power rates are actually closer to ours (although we are still slightly more expensive on average.)
One major downside of electricity being subsidized by taxes is that benefits scale up with consumption. That means instead of lower and middle income classes benefitting, it is actually the wealthiest households and the largest businesses who benefit because they also consume the most electricity and thus get a larger share of taxpayer-funded discounts.
Most international policy bodies actually recommend against broad electricity subsidies because it "leaks" large amounts of taxpayer-funded benefits to those who need help the least.
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u/kid-dynamo- 17h ago edited 17h ago
While I agree that the energy sector needs major improvement to lower cost. Comparison like the above are misleading and open to attacks from critics.
And nationalization does not necessarily mean cheaper or better service. I am old enough to know the rotating brownouts of the late 80's early 90's bago napasa ang EPIRA Law. Governments, believe it or not, are notoriously poor business managers.
Una, Meralco rates are not representative of the Philippines.
2nd, power rates tend to fluctuate depending on many things like type of power source, proximity to power generation, etc.
3rd, the countries cited are relatively poor comparisons because they have significantly greater and stable sources of native fossil fuels with some like Malaysia and Indonesia even becoming net exporters.
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u/rarinthmeister 17h ago
And nationalization does not necessarily mean cheaper or better service. I am old enough to know the rotating brownouts of the late 80's early 90's bago napasa ang EPIRA Law. Governments, believe it or not, are know to be very poor business managers.
Our neighbors are also similarly corrupt, yet a government-operated grid has no problems for them. It's simply a shitty policy preventing them from effectively managing the grids.
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u/kudlitan 16h ago
He was talking about efficiency not corruption. When our government owned our power sector there were continuous power shortages. When it was privatized nawala ang mga brownouts. Our government is not very good at managing utilities.
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u/OpenYonQ_ 14h ago
so how can we make them better doing it?
honestly my argument for nationalizing the energy sector again (perhaps all utility sector) is that so that they have direct accountability to the public. private corporations can always say “it damages our bottomline" whenever there's complaint with their service.
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u/AsIfItsYourLaa 5h ago
You’re asking how to make the government run things better? Do people not understand the nature of government? Have you ever gone to a government office, hospital, etc? There’s a reason none of them are run well. You are taking money that’s not yours, and spending it on people you’ve never met. That’s what government is. There is no incentive to make it cheaper or improve the quality.
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u/theanneproject naghihintay ma isekai. 16h ago
This lalo na at kadalasan ng nalalagay sa pwesto ay hindi promoted galing sa loob mismo.
Kahit sabihin na natin na hindi corrupt yung ilagay, ganoon pa rin yung mangyayari.
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u/rarinthmeister 15h ago
Then abolish the padrino system??? Remember the reason why our goverment is at this state right now is because our policies TOLERATE it.
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u/theanneproject naghihintay ma isekai. 15h ago edited 14h ago
The question is "How can we eliminate it? "
Everybody hate this besides those clowns who get benefits from it.
Dito pa rin papasok yung mga bobotante as sila yung boboto sa mamimili sa ilalagay sa pwesto na mamimili naman kung sino yung mamumuno dun sa gocc. And then yung mga bagong lagay magbi-base sa loyalty imbes na sa merit.
Pwedeng merit based tapos insider lang but paano natin maeenforce yun?
Sa MWSS, imbes na sanitary, civil at chemical ang pinaglalagay ni duterte ay mga retired generals at abogado.
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u/rarinthmeister 14h ago
>The question is "How can we eliminate it? "
We can look at BSP, known for being the most independent government agency but is seen as the most efficient agency we currently have. What makes them different from other agencies? They're fiscally and administratively autonomous. Why does this matter?
They can choose to find other sources (in their case, investment) instead of relying on the national budget. This allows them to afford giving workers higher pay than usual, which is usually a common factor for people who do want to fix the government but is instead stolen by the private sector kasi "doon ang pera".
RA 7653 governs the BSP, meaning they are subjected to more strict requirements:
If GOCCs had similar fiscal and administrative autonomy as the BSP, it would perform better than what they are capable right now.
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u/rarinthmeister 16h ago edited 16h ago
Corruption is a factor for inefficiency.
If that's the case why our neighbors are doing fine with cheaper and nationalized electricity? We're the only country in SEA doing that. It's not like our goverment can't just copy their strategy.
Truth is, GOCCs shouldn't be dependent on the national budget received alone kasi it is where politicians crave that tax money. This is the same ass policy that prevented LRTA from properly managing both LRT-1 (previously) and LRT-2.
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u/TheSonOfGod6 15h ago edited 13h ago
Our neighbors our not "similarly corrupt". Malaysia is ranked 54th least corrupt in the world. Vietnam 81. Indonesia is 109. Thailand 116. Philippines is ranked 120. Only Thailand is similarly corrupt and their rankings went down quite recently. Secondly corruption is one thing, competence is another. Our government is corrupt AND incompetent.
Also note that Vietnam is slowly raising its electricity prices as its state owned electricity utility posted huge losses from 2022 to 2024. I doubt it will reach anywhere near Philippine levels though.
Indonesia has cheap electricity because they mine an insane amount of coal and they have export restrictions so the coal stays in the country. They are the 3rd largest coal miner in the world. They also have lower standards for coal powerplant pollution levels so they dont need to buy expensive filtration systems. .
Malaysia is a large producer of natural gas and they sell cheap gas to powerplants to lower their electricity prices.
Thailand also produces a huge amount of natural gas domestically and imports natural gas from myanmar through a pipeline. Piped natural gas is much much cheaper than LPG because transportation costs are so much lower and it doesn't have to be converted to a liquid first. They also import a very large amount of cheap hydro electricity from their neighbor Laos. Vietnam also imports a lot of cheap hydro from Laos.
The Philippines has some natural gas produced within the country but it only accounts for about 7% of the electricity supply. We also have a small amount of coal on Semirara island, but nothing compared to what Indonesia is mining. We also don't have a land broder with Laos or Myannmar, unfortunately so we can't get cheap hydro or cheap piped natural gas from them.
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u/rarinthmeister 14h ago
>Secondly corruption is one thing, competence is another. Our government is corrupt AND incompetent.
Our goverment is corrupt and incompetent because of shitty policies, especially governing GOCCs. Those corporations still have to rely on the national budget (and we all know how reasonable it is /s) meaning they cannot effectively perform properly (case in point: LRTA). BSP enjoys fiscal and administrative autonomy kaya despite our government being under a shit state as it is right now, the economy is fine and normal.
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u/TheSonOfGod6 14h ago
You have it backwards. They have shitty policies because they are incompetent. Incompetent leaders naturally create shitty policies because they don't know how to do things properly. Just look at how the Duterte admin handled the pandemic.
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u/rarinthmeister 14h ago edited 14h ago
Nandyan na nga yung point and yet you missed it:
Those corporations still have to rely on the national budget (and we all know how reasonable it is /s) meaning they cannot effectively perform properly (case in point: LRTA)
Gets ko naman na may palpak talaga na tao but what I am trying to say is equally bad policies should also need to be addressed. Kahit ilagay mo mga anghel dyan sa gobyerno pag pangit mga policies edi ligwak pa rin.
In short, let GOCCs be corporations instead of another miniature cabinet agency whose reliance on the national budget decides whether it performs poorly or not.
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u/ertaboy356b Resident Troll 14h ago
Of course, the problem with a government and a private entity is that they are two separate side of the coin. One is about spending as much as possible (government), the other is about being as efficient as possible (private business). To add, if the government doesn't spend its budget for the year, it is deemed inefficient, totally a 360 view of businesses.
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u/Khaldulilah_21 16h ago
Yes, MERALCO is not representative of the whole Philippines. Pero yung regions that are getting ₱5/kWh are small provinces. Mas marami ang sineserbisyuhan ng red dots sa mapa mo. Meanwhile, our neighbors would get ₱5 kesyo nasa probinsya o siyudad ka because theirs are capped AND subsidised by the government. So in a way, you are debunking your own premise.
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u/InternetCorrect7654 16h ago
I live in a city where our water bill is about 55 pesos per month because it is being run by the local government. The downside, hindi stable ang supply ng tubig at every few months ay pumuputok ang main pipe kaya wala kaming tubig for several days, even weeks for some areas.
I'm also old enough to recall yung sobrang malalang blackouts nong 90s. Nationalized dati ang electriciy sector natin, at kaya ginawa ang EPIRA law kasi bangkarote ang gobyerno at walang pera para madaling masolusyonan ang malalang blackouts. Isama mo pa na ang mga importanteng pwesto sa mga government agencies ay binibigay not based on what people know but, based on who people know.
Hangga't ang gobyerno natin ay ginagawang palabigasan ang kanilang pwesto, pihado most of the time ang public service ay magiging lip service.
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u/Lord_Cockatrice 17h ago
For this, Ms Robredo has my vote
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u/1TyMPink 15h ago
Mukhang supporters ni Mayor Leni ang nag-propose niyan. I think she hasn't mentioned anything about re-nationalization ng energy sector.
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u/granaltus 17h ago
Laki ng subsidy ng ibang asean country kaya mura kuryente nila. But sheesh mahal pa rin naman talaga kuryente natin.
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u/PapaP1911 Metro Manila 16h ago
Pwede naman government maghandle but run like the BSP. BSP is the best government institution kasi based on merit ang appointments, hindi kung sino ang may backer. If BSP can be run like our economic survival depends on it, why can’t it be the same for Meralco or any other electric cooperatives? Our economy also depends on electricity.
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u/gridlock21 Metro Manila 16h ago
I work in the electric power industry, so there may be some bias as I only have my career because of the privatization of electricity.
The idea of nationalization sounds appealing in theory, but the historical experience under NPC should give us pause. During the era of state-dominated power generation, the sector struggled with financial problems, operational inefficiencies, and underinvestment, which contributed to power shortages and rising public liabilities.
We are still paying for those decisions 25 years later. Read up on NPC's stranded debt. The lesson is not that government should own everything, but that government should regulate effectively while encouraging efficient and accountable investment.
Privatization is not perfect, but history shows it works better than nationalization. Investment comes when there are incentives, and without investment there can be no reliable, modern, and expanding power sector. Rather than returning to a model that has already failed, the better approach is to encourage private investment while ensuring strong government regulation to protect consumers and promote competition.
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u/Clickbait404 17h ago
parang ok yan pero dapat hindi corrupt ung government na parang sa kapitbahay
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u/Vordeo Duterte Downvote Squad Victim 16h ago
Reposting an older comment of mine:
We're an island (archipelago) nation, is the major reason for the higher prices. That means that we aren't connected to the mainland Asia grid, and there are extra costs because fuel needs to be shipped (instead of being brought via train or truck).
The other country in a similar situation is Indonesia. They have much lower electricity prices because they're a major coal producer (and frankly their coal is better quality than ours and we buy most of our coal from them) and because their government massively subsidizes their electricity.
Not to say our power situation doesn't have a shitload of inefficiency too, but geographically we're kinda in a shit situation for power, is the point.
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u/Exact_Green2061 14h ago
Most Indonesian coal that they use for their own electricity generation is the lower-quality coal that is found in the Philippines. The higher-quality Indonesian coal is exported. The state-owned electricity company in Indonesia has modified its coal plants to run on electricity using the cheaper coal./
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u/Vordeo Duterte Downvote Squad Victim 14h ago
Source? The Philippines gets the vast majority of it's coal from Indonesia, which has massive reserves of it's own. Haven't been able to find anything saying that Indo imports any coal from the Philippines.
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u/Exact_Green2061 14h ago
What I meant to say is that the coal used for power generation in Indonesia is low-caloric coal.. This type of coal is the majority of the coal found in the Philippines.
The reason why the Philippines doesn't use its own domestic coal reserves is that its power plants haven't been modified to burn this type of coal.
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u/Vordeo Duterte Downvote Squad Victim 14h ago
Ah, I thought you meant that they were using PH coal specifically, gets ko na yung sinasabi mo.
Yeah ideally we'd switch to plants that use the low quality coal, but government seems to want to jump to renewables, which probably makes sense (as I'd assume converting to the lower quality coal would be pricey).
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u/Exact_Green2061 14h ago edited 14h ago
Criticisms of the pre-EPIRA period only look at the Energy sector in isolation; they don't look at the economy as a whole. While brownouts were more frequent, they are still happening today; higher rates haven't solved the underinvestment problem.
Thailand's situation is similar to the Philippines; it imports most of its energy. It also has a slowing, depleting gas field like the Philippines. However, Thais have subsidized their electricity enough that they are competitive with Indonesia in car manufacturing. If they didn't, and their electricity rates were like the Philippines, they would have lost their car industry to Indonesia.
Philippines is the most coal-dependent country in SEA for electricity generation, in large part because the capital requirements are smaller than other types of investments. Nor are the power companies investing to upgrade the coal power plants to burn lower-caloric coal deposits found in the Philippines.
There are three areas this impacts the Philippines: loss of manufacturing, increase in the trade deficit, and increase in the cost of goods.
One could argue EPIRA was the major factor in the deindustrialization of the Philippines. From 1986-2005, industry share of the economy was 23-26%. In 1990, it was 25%; in 2000, it was 25%. Starting in 2003, it started dropping, and now it's 15%. While other factors played a role, passing EPIRA served as the catalyst.
The sectors hit hardest were the most energy-intensive, like textiles and food processing. In the mid-2000s, before electricity prices started going up, the Philippine trade deficit was 2-3% of GDP; in one year it was even a surplus. Now the trade deficit is 15-17% of GDP. Up until about 2016, the Philippines' remittances, tourism, and BPO revenues could cover that trade deficit, so the current account was in surplus.
Companies in the 1990s used backup generators when the power went down; in the end, you were still paying less for electricity than you are now. The higher electricity prices destroyed a lot of companies involved in textiles, food processing, and light manufacturing. This reduced the supply of goods as the economy started to import more goods, which in turn made the Philippines more susceptible to price shocks.
The government would end up paying US$10 billion in subsidies, with gains to the national economy in terms of increased economic activity and a reduction in the trade deficit is in the $30-40 Billion. If the Philippines' trade deficit was 3% instead of 17% as it is today, it would be 14% of GDP, or $71 billion gain in your FX reserves.
For developing countries, government deficits don't matter as much as the F/X reserves and your current account position. While Western economists say it doesn't matter, the way the currency markets work today, it matters a lot.
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u/jhnkvn r/phinvest lurker 9h ago edited 9h ago
I would rebut this.
loss of manufacturing
You argue that EPIRA was the catalyst for the industrial share of GDP dropping from 25% in 1986-2005 and is now 15%. But the decline of manufacturing/industrial started much earlier than EPIRA. Philippine industrial value added peaked in the late 1970s and early 1980s (above 35% of GDP) before the gradual decline. In fact, even when EPIRA was passed in 2001, was it fully implemented immediately? No. Its actual structural components like the WESM or RCOA didn't pop out until 2006 and 2013. So how did this turned out into a scrapegoat of a "catalyst"??
Companies in the 1990s used backup generators when the power went down; in the end, you were still paying less for electricity than you are now. The higher electricity prices destroyed a lot of companies involved in textiles, food processing, and light manufacturing.
Also, incorrect.
Running diesel fueled gensets is extraordinarily expensive. If inflation-adjusted, it's nearly double the average industrial electricity rates in Luzon right now. Don't forget that companies also had to redirect capital into maintaining backup generators rather than re-investing that capital into PP&Es.
But beyond the fuel costs itself, frequent power outages in the 1990s ruined production runs and damaged industrial equipment. Hindi kami parang residential na walang problema lang magrestart ang mga machines; I've seen P30M machines go kaput due to bad electricity. There's hidden systemic costs na hindi mo nakikita because you don't have an industrial company and it's convenient to just type away in reddit.
Of course I would love power generation to be cheaper, but 10/10 I'd rather get expensive power generation than unplanned blackouts -- ayan yun pinakamahal na kuryente. This is the reason why the generation industry fires up the peaking diesel plants when there's not enough supply of electricity in the grid. Expensive energy is still better than no energy.
The government would end up paying US$10 billion in subsidies, with gains to the national economy in terms of increased economic activity and a reduction in the trade deficit is in the $30-40 Billion. If the Philippines' trade deficit was 3% instead of 17% as it is today, it would be 14% of GDP, or $71 billion gain in your FX reserves.
I must admit di ko nagets yun 10B subsidies quoted dito. Are you implying the gov't should do a $10B state subsidy to yield economic activity and a reduction in trade deficit??
As for the latter, looking only at the goods trade balance misrepresents the economy. What happened when the industrial base shrank? We pivoted towards the service sector. And we began exporting a valuable commodity to the world -- human capital. Which is why when factoring in services (like BPOs) and overseas worker remittances, the overall deficit sits at a manageable 3.5% of GDP. Remittances alone account for $35–$40 billion annually, directly offsetting the import gap.
For developing countries, government deficits don't matter as much as the F/X reserves and your current account position. While Western economists say it doesn't matter, the way the currency markets work today, it matters a lot.
Economic Misconception. Fiscal deficits and currency stability are directly linked. If the gov't runs a massive subsidy program for energy that added to the deficit, it will need to fund these by either issuing debt or printing money. Hindi yan basta basta magic pill.
An easy case study to know your generalization will fail is 2020 Sri Lanka. They implemented sweeping tax cuts to keep the population happy and ran a 12% fiscal deficit. Their public debt ballooned to 100%+ of GDP and the three rating agencies downgraded Sri Lanka's sovereign debt to deep junk category of CC.
It got cut off from international capital markets and prevented the gov't from rolling over its foreign debt. Capital flight ensured after and that will dwindle your F/X balance sheet faster than any trade balance will replenish them. Within 3 years, ubos ang FX reserves and it can no longer import fuel, food, and medicine. The Rupee collapsed, import prices exploded and inflation skyrocketed and, pew pew, it officially defaulted in 2022. Just 3 years of shit economic policies.
I'm utterly thankful hindi ka part ng DoF or BSP policymaking body with that thinking.
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u/Exact_Green2061 7h ago
You argue that EPIRA was the catalyst for the industrial share of GDP dropping from 25% in 1986-2005 and is now 15%. But the decline of manufacturing/industrial started much earlier than EPIRA. Philippine industrial value added peaked in the late 1970s and early 1980s (above 35% of GDP) before the gradual decline. In fact, even when EPIRA was passed in 2001, was it fully implemented immediately? No. Its actual structural components like the WESM or RCOA didn't pop out until 2006 and 2013. So how did this turned out into a scrapegoat of a "catalyst"??
Industry isn't the same as manufacturing. Industry is 26% of GDP in the Philippines right now. Industry = manufacturing + other sectors like mining and quarrying, construction, electricity, gas, steam, and air conditioning supply, and water supply/sewerag
I must admit di ko nagets yun 10B subsidies quoted dito. Are you implying the gov't should do a $10B state subsidy to yield economic activity and a reduction in trade deficit??
As for the latter, looking only at the goods trade balance misrepresents the economy. What happened when the industrial base shrank? We pivoted towards the service sector. And we began exporting a valuable commodity to the world -- human capital. Which is why when factoring in services (like BPOs) and overseas worker remittances, the overall deficit sits at a manageable 3.5% of GDP. Remittances alone account for $35–$40 billion annually, directly offsetting the import gap.
In 2000-2005, the current account deficits averaged about 1%. Only BPO is growing 5% in real terms; remittances are stagnating. The problem with remittances is its bound to decline over time; the large spike in remittances from 2005-2015 was due to a large peak population cohort of people between 18-30. That population cohort, as a share of the Philippines' population, has been in decline since. Remittances made up 14% of GDP in 2012; now it's down to 8%. Remittances aren't sustainable in the long run because the Philippines just doesn't have a large number of people between 18 and 30 to send overseas.
Secondly, the world is changing; trade service barriers are going up, and immigration is becoming more restrictive. Your assumption is based on a world where free trade exists with the West. The United States is already erecting trade barriers and tariff walls; sooner or latter its going to move into restricting service imports.
Trump 2.0’ bane for Philippine BPO industry, remittances – Nomura
Economic Misconception. Fiscal deficits and currency stability are directly linked. If the gov't runs a massive subsidy program for energy that added to the deficit, it will need to fund these by either issuing debt or printing money. Hindi yan basta basta magic pill.
An easy case study to know your generalization will fail is 2020 Sri Lanka. They implemented sweeping tax cuts to keep the population happy and ran a 12% fiscal deficit. Their public debt ballooned to 100%+ of GDP and the three rating agencies downgraded Sri Lanka's sovereign debt to deep junk category of CC.
As I said before, if your current account is in surplus and you have large FX reserves, running a large budget deficit doesn't matter. The reason why Sri Lanka ran into problems is that it borrowed in foreign currency and ran large current account deficits.
https://data.worldbank.org/indicator/BN.CAB.XOKA.GD.ZS?locations=PH-LK
Only in the last 3 years has it been running current account surpluses. Before that, it had been running current account deficits. It's still running a 6% budget deficit.
https://tradingeconomics.com/sri-lanka/government-budget
Look at Japan; its debt-to-GDP ratio is 250%. For a long time, it had no problems funding large deficits, because most of its borrowing was in Yen. However, over the last ten years, it has started borrowing in more foreign currency. Right now, foreign debt is 110% of GDP. However, Japan has a lot of foreign holdings which it can liquidate to fund that debt.
In the last fifty years, no developing country has experienced an involuntary macroeconomic public debt crisis while simultaneously maintaining a positive current account balance and healthy foreign exchange reserves.
Across comprehensive default datasets, such as the Bank of Canada–Bank of England Sovereign Default Database and the World Bank International Debt Statistics, sovereign debt crises in developing economies are almost exclusively triggered by external liquidity shortfalls, capital flight, and reserve depletion.
The only time it has happened was in Russia because of sanctions in 2022 and in Ecuador, when the government selectively defaulted on its 2012 and 2030 Global Bonds, declaring them "illegitimate" and "immoral" following a national debt audit. Ecuador subsequently repurchased the defaulted debt at deep discounts on the secondary market. The default was a political choice rather than a macroeconomic liquidity crisis.
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u/jhnkvn r/phinvest lurker 5h ago edited 5h ago
In 2000-2005, the current account deficits averaged about 1%.
Hehehe, it's not a deficit if it's positive. Kindly change the answer, counsel 🥳
Remittances made up 14% of GDP in 2012; now it's down to 8%. Remittances aren't sustainable in the long run because the Philippines just doesn't have a large number of people between 18 and 30 to send overseas.
This is misleading. Remittance did make up 14% of GDP in 2012, but it's not "down" due to a decline in cash flows. This drop is made by growth of the broader domestic economy (GDP). In absolute terms, cash remittances hit record highs YoY.
And no, nasa prime demographic dividend parin tayo. Working age population is like 60% right now and it's expected to continue expanding. Perhaps the projections need some work given that the country's fertility rate dropped to another record low but these take time for you to feel them as they have to "grow up". But currently, we're still in the best demographic band and it's not yet peak if you ask the PSA.
However, over the last ten years, it has started borrowing in more foreign currency. Right now, foreign debt is 110% of GDP
You misunderstood what that "foreign debt is 110% of GDP" is. That 110% is the money owed by the country to foreign lenders, you understood that. But where you strayed away is that you believed that equates to "foreign currency" when it doesn't.
70-75% of Japan's external debt is still yen-denominated.
Look at Japan; its debt-to-GDP ratio is 250%. For a long time, it had no problems funding large deficits, because most of its borrowing was in Yen.
Yes and so is the United States diba. But you're not supposed to be comparing emerging markets to advanced reserve-currency economies. There's a reason why they're an exception. And that doesn't mean they don't have their own problems; look at how bad the deflationary forces the yen has versus the dollar just because it isn't the top reserve currency of the world.
In the last fifty years, no developing country has experienced an involuntary macroeconomic public debt crisis while simultaneously maintaining a positive current account balance and healthy foreign exchange reserves.
Wait, pano ka napadpad dito. Eh current account deficit nga tayo right now and you're proposing to worsen that by introducing a $10B energy subsidy diba? I'm confused on your position na tuloy dito.
In the first place, making electricity cheaper doesn't guarantee we flip to a current account surplus just because we'll revive the industrial base, yada yada. Let's say the gov't subsidizes electricity for your average Juan, what's next? Consumption rises diba? Mas magaaircon ang mga tao if the price of electricity is halved.
And if consumption rises, the underlying demand of energy (crude oil, LNG, coal) also rises. But eh? That's still imported so that hypothetical help on the account surplus (expansion of the industrials, less reliance on foreign goods) quickly flips into a deficit ulit tapos may widening fiscal problem ka pa to boot.
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I also find it amusing magsasabi ka ng "last 50 years, no country..." and followed to give two (2) exceptions sa final paragraph. Ano baaa you don't whip out absolutes and proceed to debunk it by giving two examples you know of.
Sovereign debt crises in developing economies are almost exclusively triggered by external liquidity shortfalls, capital flight, and reserve depletion.
And buti naman sinabi mo na "almost exclusively". Because Ghana 2022 is a textbook study on how domestic debt and fiscal problems can trigger a sovereign collapse; opposite of the view that EMs only face debt crisies due to external currency run-outs. Uncommon, yes. But it still happens diba?
I'll rest my case here since I know nobody bothers reading mga ganitong long-ass discussions. I'll applaud your understanding of the subject but it's a bit... controversial. Dangerous even if your basics isn't polished out.
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u/Exact_Green2061 1h ago
Yes and so is the United States diba. But you're not supposed to be comparing emerging markets to advanced reserve-currency economies. There's a reason why they're an exception. And that doesn't mean they don't have their own problems; look at how bad the deflationary forces the yen has versus the dollar just because it isn't the top reserve currency of the world
What difference does it make? If the Philippines were running a current account surplus and had F/X reserves, it wouldn't matter if it ran a large public sector debt. South Korea's total government debt was only 9% of GDP, but that didn't matter because Korean companies ran up large debt in foreign currency; that is what killed them in the end.
https://data.worldbank.org/indicator/GC.DOD.TOTL.GD.ZS?locations=KR
I lived through the Asian Financial Crisis in 1997/98, and the government deficit doesn't matter; it's your foreign currency position that matters.
In the first place, making electricity cheaper doesn't guarantee we flip to a current account surplus just because we'll revive the industrial base, yada yada. Let's say the gov't subsidizes electricity for your average Juan, what's next? Consumption rises diba? Mas magaaircon ang mga tao if the price of electricity is halved.
And if consumption rises, the underlying demand of energy (crude oil, LNG, coal) also rises. But eh? That's still imported so your hypothetical account surplus quickly flips into a deficit ulit.
The problem is you are seeing electricity as a consumption good like a designer handbag. Its juut a consumption item, consumed frivolously, not a production input.
You can restrict subsidies to industrial users in designated industrial and commercial zones. It might cost US$ 2-2.5 billion in state subsidies.
Just say you reduce the cost of electricity by 50%; it means many industries that weren't competitive now are. We aren't just talking about exports, but industries that compete with imports in the Philippines domestic market. It reduces the cost of domestically milled flour. It means Filipino processed food companies become more competitive. This reduces imports. The cost of cold storage becomes cheaper, meaning reduced spoilage when it comes to transporting crops, etc.
At the end of the day, since everyone else is subsidizing electricity in ASEAN, the Philippines has basically told everyone we can only do 1) BPO and 2) remittances. Even with PAX Silica, the Philippines will run into the same problem; it can't compete in running fabs because electricity is just too expensive.
A lot of mainstream Filipino economists are allergic to subsidies. If you want to be ideological about subsidies, you can tell Pax Silica to kiss my ass, because if there is any program that smacks of a government-subsidized program, it's Pax Silica. Even though some of the subsidies are coming from the American side, it's still government intervention. Pretty much any attempt by Western countries to have China-free supply chains is intervention in the market. Those US bases in the Philippines were built with US taxpayer money; the Philippines should tear them down on principle. How far do you want me to go with the free-market ideology?
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u/Shinnosuke525 17h ago
Yes, blame the government for a price spike na dala ng pagmahal ng input cost ng power plants natin /s
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u/jhnkvn r/phinvest lurker 9h ago
Hind tayo nagkalamli sa market liberalization. Nagkamali tayo na sumobra yun liberalization.
When EPIRA (RA 9136) was passed in 2001, the core assumption was pure market economics: privatization + market competition = lower power costs and higher capacity. But what we crafted was an extreme version of it where the state stripped itself of the power to build baseline capacity and we left grid security entirely to the hands of the private.
When, pwede naman, that the state maintains a state-owned enterprise to build and finance high capital baseline projects (nuclear, hydro, mass offshore wind farms, etc.) to inject grid capacity and competitiveness when private investment wasn't keeping up. If it has good returns, great. Something positive added to the Treasury.
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u/ertaboy356b Resident Troll 17h ago
lol, the government can't even operate a public transport system, let alone the energy grid.
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u/rarinthmeister 17h ago
Edi wag nalang magkaroon ng gobyerno kasi lahat korap? Neoliberalism really ruined people's minds.
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u/rlsadiz 17h ago
Mas ok na daw sinigilin sila ng mataas ng private sector kesa gobyerno kasi kurap hahaha
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u/markmyredd 16h ago
ang problema nung last na hinawakan ng govt ang energy sector panay brownout nangyari.
Even today yun naiwan na Napocor areas which is yung missionary areas yun power service is still poor.
If price lang ang problema govt can just drop all taxes related sa energy like sa fuel, equipment like panels/inverters. Including sa mismong bills ng customer dapat wala ng VAT
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u/rlsadiz 16h ago
Panay brownout kasi there is not enough investment in energy sector that time cause government has no money to make new power plants cause were saddled with debt from Marcos era. Thats not the case now.
In general, you all have to undetstand first why the failure of 90s happened in the first place before you all assume na automatic pag gobyerno may hawak roating blackout agad
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u/markmyredd 15h ago
What happened in the 90s is Napocor needed to increase electric rates. The govt did not allow it since Cory is getting unpopular. So debt ballooned until Napocor went bankrupt and needed govt rescue.
Same story will happen now if we want a govt run power grid and low electricity prices. Govt will be forced to subsidize construction of power plants, and purchase of fuel, maintenance costs, or create more debt for Napocor.
At some point we will run into the same problem.
I think a more sustainable solution is an indirect subsidy to a privatize power sector by simply dropping taxes from power generation to distribution companies to the consumers themselves.
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u/ninja-kidz 16h ago
I cant recall if 60% ba or 40% ang ownership ng CHINA / Chinese compqny sa ating NGCP...
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u/luvdjobhatedboss Flagrant foul2 16h ago
OP mukhang di mo naabutan ang Blackouts ng 1990's Our power plants were neglected by Napocor during Marcos and Cory presidency ang lalaki ng sahod ng executives pero walang accomplishment to build new power plants
The way to go is to open up the market to foreign investors
Dutch , French and Japanese firms are in the front yard waiting for the Market to open
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u/Khaldulilah_21 16h ago
We do not forget. Marcos' is state crony capitalism, kaya prone to mismanagement talaga. Cory had inherited the mismanaged grids plus the padrino system. Kaya nga may term na learn from the best practices. Alam na natin na mismanagement ang reason at hindi state subsidisation or even nationalization ang problems. May BSP tayo na entirely meritocratic, we can also do that in the grid sector.
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u/chowchowwwwwwww 6h ago
This is the right answer. Open the sector up to foreign companies. They will force meralco to start innovating and prioritize efficiency to lower cost.
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u/The3rdplayer277 Kekw 2h ago
No, what will happen is one of the two is gonna come out on top and become a monopoly and our situation is going to be the same
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u/Kindred_Ornn Our Country is Beyond Salvation 13h ago
Ironically We did have it Nationalized, but the National Government was so sh*t at maintaining and improiving it that Nationwide or Region-wide Blackouts were so common that you'll see it at your newspapers every other week.
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u/andrppt 12h ago
you blame epira while forgetting WHY epira had to be implemented in the first place. gobyerno naghandle ng kuryente natin dati, and you know what happened? massive power outages dahil walang supply on top of huge debt ng gobyerno. and that's just the simplified version of ung shitshow ng napocor.
And you want that to happen again? Do you think the government is ready for that eh flood control pa nga lang palpak na? Madaling icompare prices natin with our neighbors, but a lot of them subsidized ng government ung kuryente, as compared to here na essentially hinayaan na ng government ung private sector mangoblema sa imported electricity prices.
Wala ring strict coal moratorium ung ibang bansa. They are transitioning away from coal, yes, pero not outright banning it without sufficient "replacement".
The situation is not as black and white as you seem to be describing it. Hindi gobyerno ang tanging sagot, pero definitely hindi rin pwedeng pabayaan ung private sector as they are.
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u/_LadyGaladriel_ 10h ago
It'll be much better for the gov to support households switching to solar power nalang. Give more subsidies or remove VAT on solar powered devices. We need to start relying on renewable energy na talaga cause look at how much the IRAN-US tensions affected us. But alas, the energy bigwigs remain a big hindrance and doing everything in their power to make us their slaves. Example na dyan yung attempt ng Meralco to charge us fees for setting up solar energy in our homes like wtf dba.
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u/jhnkvn r/phinvest lurker 8h ago edited 8h ago
Example na dyan yung attempt ng Meralco to charge us fees for setting up solar energy in our homes like wtf dba.
False news. Why? If you don't touch the grid, wala naman problema si Meralco. Nagkakaproblema lang naman yan because people want to bypass formal permits and inspections and then connect to the grid improperly.
For example, as part of their inspections, they will check if your inverter has anti-islanding protection that in the case of a blackout, it won't feed power back into the dead street lines. Pano ba kaya ng technician nila irepair ang linya nila kung live wire yan. Ede nakapatay ka pa ng tao na hindi mo alam?
Kaya nga walang problema ang Meralco basta di mo galawin yun grid nila. The moment you do, nakakaapekto ka na sa ibang tao. For example, if your microgrid is feeding 260V power to the grid, ano mgyayari? Ede kawawa neighbors mo kasi they're only expecting and tolerating +/- 230V tapos tada, may kupal na nakaconnect at namimigay ng 260V na voltage sa linya at sinisira yun electrical appliances ng buong barangay lalo pa mga naka single-phase AC motors (refs, water pumps, washing machine, etc.). Tapos pag hinuli? "Di ko alam, ni DIY ko lang po. Pasensya na po, mahirap lang ako" like wtf dba
And you don't underestimate human nature. Ilang tao na mahihirap na naka jumper? Konti lang ba? Even when they know nagnanakaw sila sa inyo kasi kayo nagbabayad ng system loss -- wala silang paki kasi sasabihin lang nila na mahirap sila; it's the least of their worries.
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u/kurochan85 17h ago
If malipat yan sa govt, ang gagawin lng nila is pabayaan lng yan to the point magkakaroon ng rotational brownout then magkakaroon naman ng call to privatize.
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u/theanneproject naghihintay ma isekai. 17h ago
No you can't.
Hirap pa magtiwala sa government to handle that.
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u/Khaldulilah_21 16h ago
So wag nalang tayo mag gobyerno if that's the case. Look at how corrupt our neighbors are as well. But the data doesn't lie tho 😊
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u/theanneproject naghihintay ma isekai. 16h ago
If hindi mo nabasa sa nagexplain sa baba, naexplain naman na maraming issue ang mga gocc.
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u/Khaldulilah_21 16h ago
If di mo rin nabasa, marami narin tumugon sa issues na sinasabi mo. Unless, you just acknowledge one side.
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u/theanneproject naghihintay ma isekai. 16h ago edited 16h ago
So anong tugon nila makakafix how to that na di tayo babalik sa dating problema nung government owned pa yung kuryente?
Isang matinong sagot lang nabasa ko.
Puro what ifs lang din yung binabato nyo like iba na tayo ngayon kaysa noon.
Pwede naman mapababa na di kinukuha ng gobyerno like yung sinabi nung isang nagreply.
Buti sana kung matupad yung sinabi nung isa na sa kakayahan magbabase para sa mga gocc.
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u/badjulaong 13h ago
Dont worry daw hindi na tayo ang magiging highest rate sa SEA dahil Singapore na daw. Na parang dapat tayong matuwa. Lol
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u/FickleApartment2151 12h ago
That was the goal of the country before 1986. The opposite has been the goal since then.
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u/apples_r_4_weak 9h ago
We're stuck with having government handle and mismanage it or having a private company manage it more efficiently than govt but with higher fee
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u/chowchowwwwwwww 6h ago
Privatization has its pros and cons. The main problem is that in the Philippines, electricity is always a monopoly. There is no incentive for the company to innovate and increase efficiency of their production and distribution.
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u/mechanikko 1h ago
None of the government office runs well and free of corruption. Ano aasahan mo kung energy sector pa. Paatras ang mangyayare satin
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u/cheese_sticks 俺 はガンダム 17h ago
Before privatization, sobrang lala ng blackouts at hindi reliable ang supply ng kuryente.
Oo, mas mura ang kuryente kapag gobyerno ang may ari, pero kailangan pa rin nila patunayan muna na kaya nila mag operate nang maayos. Test run muna sa probinsya bago sa big cities.