Higher power rates to add to layoffs, TUCP warns

MANILA (Apr. 12) — Costlier electricity due to higher generation charges by the state-run National Power Corp. (Napocor) would further drive firms, including those in export-processing zones, to throw out more workers in the weeks ahead, the Trade Union Congress of the Philippines (TUCP) warned Sunday.

“The upward adjustments in Napocor rates will definitely have the effect of an extra heavy tax on businesses and households,” said former Senator and TUCP secretary-general Ernesto Herrera.

“The rate increases are counterproductive, and have tremendous potential to inflate the prices of consumer goods and services. They could not have come at a worse time,” Herrera said.

He said elevated power rates would make it even more difficult for many firms to cope with the sudden fall in their export sales due to the global economic meltdown, and force them to cut some more on their labor costs.

The higher charges would also weigh down on non-exporting firms already reeling from the decline in domestic consumer spending amid mounting job losses and the unusually harsh economic conditions, said Herrera, former chairman of the Senate committee on labor, employment and human resources development.

Herrera identified several power-intensive industries which he said are bound to be hit hard by higher electricity rates: construction, fertilizer, cement, ceramics, steel, petrochemicals, aluminum, pulp and paper, glass, and basic chemicals.

Among export-oriented industries, Herrera said the power-intensive manufacturing of electronics as well as garments and textiles are “extremely vulnerable to higher electricity charges.”

“Retail trade will likewise suffer, since large shopping malls, supermarkets and restaurants tend to consume a lot of electricity for air-conditioning, lighting and refrigeration,” Herrera pointed out.

“Actually, even contact centers and other business process outsourcing providers risk being negatively impacted since they operate day and night, seven days a week,” he added.

Herrera said other industries that consume large amounts of electricity are mining and quarrying; the milling of flour, rice, corn, coconut and sugar; poultry growing; food processing and canning; and even fisheries, which require cold storage.

Effective last month, Napocor raised its generation charges by 46 centavos per kilowatt hour (kWh) in Luzon; by 84 centavos per kWh in the Visayas; and by 71 centavos per kWh in Mindanao. As a result, Napocor unit charges are now P4.3648 for Luzon; P3.7255 for the Visayas; and P2.8177 for Mindanao.

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