A lawmaker on Tuesday proposed the lifting of the initial public offering (IPO) requirement for power generation companies (gencos) to encourage more investments in the power sector.
“In order to promote competition and encourage market development, we have to relax some policies such as the public listing which proved to be burdensome to generation companies especially to small renewable energy (RE) gencos that have difficulty in complying,” Senator Sherwin T. Gatchalian said.
Under the Electric Power Industry Reform Act (EPIRA) of 2001, all private gencos and distribution utilities (DUs) are directed to sell a portion of at least 15 percent of common shares to the public in 5 years.
Under Senate Bill 2217, Gatchalian said Section 43(T) of Republic Act 9136, otherwise known as the EPIRA Act, no longer serves its purpose.
“The initial purpose of the public offering requirement for generation companies in the EPIRA has been rendered irrelevant given all the developments in the electric power sector. If we were to encourage more investments in generation to meet our demand needs in the next 20 years, it is crucial to eliminate this additional barrier to entry,” Gatchalian said. He said there is an urgent need to attract more investments in the generation sector as the next 20 years will require an additional capacity of 71,817 megawatt (MW) installed capacity by 2040.
The chairman of the Senate Energy Committee said 9,508MW or 13.24 percent of the additional total installed capacity will come from RE capacity to meet the one-percent renewable portfolio standard requirement under the Renewable Energy Act of 2008.
When sought for comment, the Energy Regulatory Commission (ERC) is supportive of this measure, saying this would shorten the processing time of permits sought by gencos.
“Currently, one of the reasons why the commission is limited to just issuing a Provisional Authority to Operate (PAO) is the inability of some gencos to comply with the IPO requirement. Thus, we recognize the objective of the measure and the wisdom behind the move to dispense with the requirement,” said ERC Commissioner Rexie Digal in a text message.
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