Speech
of
His Excellency Fidel V. Ramos
President of the Philippines
At the 7th International Conference of the Law Association for Asia and the Western Pacific Energy Section

[Delivered at the Shangri-La Hotel, Makati, October 26, 1994]

Energizing growth in the
Asia-Pacific region

I AM DELIGHTED that this Seventh International Conference of the Energy Section of the Law Association for Asia and the Western Pacific (LAWASIA) includes not only practicing lawyers but also leaders from both the public and private sectors, including business leaders, scientists and engineers.

The energy situation in Asia demands and deserves this kind of attention. It is full of challenges and opportunities, and availing ourselves fully of them will be crucial to our growth as individual nations and as a region.

Disparities in energy resources

The Asia-Pacific region has become one of the world’s most dynamic and important growth centers. The member countries of the Asia-Pacific Economic Cooperation or APEC, for example, account for about 50 percent of global gross domestic product and supply nearly half of primary energy supply. Together we account for 57 percent of coal production, 36 percent of natural gas and 30 percent of the output of crude oil worldwide.

However, disparities remain between our energy resources and the continuing demand exerted on these resources by our growing economies. Thus the need to intensify energy exploration and development further.

Alongside these efforts must come policies to maintain a progressive and harmonious environment to promote and govern investments in the energy sector. I commend LAWASIA and its energy section for helping create that environment.

Developing Philippine energy resources

In the Philippines, our energy development strategy covers a variety of sources, including oil, hydroelectric, coal, geothermal and nonconventional energy. Today, indigenous energy already accounts for 30 percent of our national requirements.

Recently, we also completed the appraisal of the country’s first major natural gas discovery which has the potential of displacing substantial volumes of coal and oil for power generation.

To fulfill this potential, however, we need to develop a gas industry structure that will include regulatory controls, a monitoring authority, legal foundations and governing laws. Surely, LAWASIA will be able to help us in this regard.

The development of large natural gas reserves in the Asia-Pacific will benefit not only the stability of energy supply in the region but also the global environment, since natural gas is an environment-friendly energy source for power generation.

Large-scale use of natural gas requires transport infrastructure, including domestic and international pipelines such as those envisioned for the trans-Asian natural gas pipeline. Projects such as this offer excellent opportunities for synergy, as it will link countries with excess natural gas with those that are net importers of energy.

Hydroelectric power is another energy resource that could cross borders to match exporters and importers. This is the rationale behind the regional grid project in the Indochina Peninsula, which proposes to link Malaysia and Thailand on the one hand and Myanmar, Cambodia, Vietnam and Laos on the other.

Promoting energy conservation

Indeed, there is a vast potential for energy cooperation in our region, not only because of possible synergies in energy supply and demand but also because of the diversity of economies in the Asia-Pacific, where annual per capita incomes range from a low $530 to a high of $24,000.

The different stages of development within the region provide built-in access to information, know-how and experience that can lead to the expeditious crafting of cost-effective measures and enabling laws for the energy sector.

For instance, we can learn a lot about efficient use of energy from Japan. Japan is said to have attained 36 percent reduction in energy intensity over a 17-year period.

I am pleased to report to you that in the Philippines, the Government and the private sector are working together to promote energy-efficient practices. We have launched “power patrol,” a nationwide campaign to conserve power, which involves industrial and commercial establishments, households and schools. This multisectoral campaign has initially targeted a 10 percent saving in power use.

In addition, our Congress is now conducting deliberations on proposed laws to encourage and strengthen the movement to conserve energy in our country, to include a bill to deter pilferage of electric power.

LAWASIA’s Energy Section may also wish to focus its efforts at regional cooperation on deregulation and privatization, which appear to be gaining momentum in the Asia-Pacific region.

Four years ago, for instance, the Philippines opened up the power generation sector to the private sector, both local and foreign. Consequently, private-sector power projects played a major role in ending our recurring power shortages. At present we are studying the mechanics of privatizing our National Power Corporation or its components.

Toward more deregulation

The Philippines is preparing the groundwork for the deregulation of its oil industry after 1996. Deregulating the oil industry will involve lifting controls on oil company margins and liberalizing oil imports. It will also allow oil companies to setup service stations where and when they want.

As a prelude to full deregulation, the Philippine National Oil Company privatized Petron Corporation, its refining and marketing subsidiary.

By privatizing 60 percent of its equity in Petron, the Government raised P25 billion, or $1 billion, in revenues. For the 490,000 investors who bought 20 percent of Petron shares at its initial public offering—the most successful in the history of our stock market—privatization gave them the opportunity to share in the company profits.

In other words, by the simple act of privatizing an energy company, we further improved its ability to compete in a free market, enhanced its ability to ensure stable oil supplies, generated needed revenues for the Government, and attracted hundreds of thousands of new investors, the majority being ordinary people, who also expanded the market base of the company.

I underscore the advantages of privatization and deregulation because they complement other policies intended to spur the private sector to become the engine of growth for our economy.

Our capital requirements

The energy sector requires tremendous capital to meet the demand for growth. In the Philippines alone, the energy plan for 1994-2010 is estimated to require total capital investments of $69 billion.

Initial estimates indicate that budgetary limitations will constrain the Government and allow it to contribute only about 18 percent of the total investments required. The Philippine power sector-which envisions the addition, of 30 000 megawatts-requires most of the funding- About $38 billion is expected to be generated by the private sector for independent power projects.

It is important therefore that incentives and laws be put in place to encourage private-sector participation m the energy sector.

Indeed, you of LAWASIA can play an active role m sustaining regional economic growth by helping provide a positive environment for investments in the energy sector.

I look forward, therefore, with great interest and enthusiasm to the results of this conference and to its contributions to energizing growth in the Asia-Pacific region.

Here we find law, especially energy-related law, in the service not only of promoting justice in our societies, but of providing our people with the means to achieve the fullness of their lives.