Philippines Power Report Q1 2008

The new Philippines Power Report from BMI forecasts that the country will account for just 0.84% of Asia Pacific regional power generation by 2011, with an increasing generation surplus that provides a theoretical export capability of up to 15 terawatt hours (twh) by the end of the forecast period. BMI's Asia Pacific power generation estimate for 2006 is 6,278 terawatt hours (twh), representing an increase of 8.5% over the previous year. We are forecasting an increase in regional generation to 9,207twh by 2011, representing a rise of 46.6%.

Asia Pacific thermal power generation in 2006 is estimated by BMI at 4,772twh, accounting for 76% of the total electricity supplied in the region. Our forecast for 2011 is 6,578twh, implying 38% growth that reduces the market share of thermal generation to 71% - thanks largely to environmental concerns that should help to promote renewables, hydro-electricity and nuclear generation. The Philippines' thermal generation in 2006 is estimated at 39.1twh, or 0.82% of the regional total. By 2011, the country is expected to account for 0.63% of thermal generation.

For the Philippines, oil is the dominant fuel, accounting for an estimated 57.3% of 2006 primary energy demand (PED), followed by coal at 25.9%, gas, at 9.3%, and hydro-electric energy at 7.5% of PED.

Regional energy demand is forecast to reach 4,972mn toe by 2011, representing 41.1% growth over the period. The Philippines' 2006 market share of 0.71% is set to fall to 0.72% by 2011. The Philippines' 8.4twh of hydro demand in 2006 is forecast to reach 10.3twh by 2011, with its share of the Asia Pacific hydro market falling from 1.17% to 0.68% over the period.

The Philippines' overall business environment can be considered highly unattractive in a regional context, reflecting high long-term political and economic risk, a relatively poor growth outlook for energy demand and power generation, plus limited progress in terms of electricity-sector deregulation and privatisation.

In fact, the Philippines scores well in just one area, having a reasonably low level of energy import dependency. In the BMI Business Environment Ranking matrix, the Philippines receives a higher composite score of 20, which still ranks the country 11th and last out of 11 states included in the Asia Pacific region, behind Pakistan.

BMI is now forecasting the Philippines real GDP growth averaging 5.53% per annum between 2006 and 2011, with 2007's forecast at 6.3%. Population is expected to expand from 84.5mn to 91.4mn over the period, with GDP per capita and electricity consumption per capita both forecast to increase significantly.

The country's power consumption is expected to increase from an estimated 50.3twh in 2006 to 62.7twh by the end of the forecast period, leaving theoretical surplus generation rising from 7twh in 2006 to 15twh in 2011, assuming 5.4% annual growth in generating capacity.