MARCH 1, 2007 (STAR) By Paolo Romero - President Arroyo downplayed the stock market plunge yesterday, saying the country can easily recover from the temporary slump because many industries are not dependent on the bourse for capital.

In a pooled interview following a televised roundtable discussion on inflation with some of her economic managers at Malacañang, Mrs. Arroyo said the country’s economic fundamentals remained strong despite the global stock market retreat.

"The most important thing is that our economy grows and it will continue to grow. When the stock market was going up we were going up more than the others, so that means there was confidence in our economy," Mrs. Arroyo said.

"Now the stocks around the world have collapsed so of course our stock market is affected, but the important thing is we continue to grow," she said.

She said many of the country’s industries, which propelled the economy, were not publicly-listed so they did not rely on the stock market for capital.

"In fact one of the problems of our stock market is that very few companies are listed but at a time like this when the world is having a downturn in the stock market, it (lack of publicly-listed companies) becomes a blessing also," Mrs. Arroyo said.

Executive Secretary Eduardo Ermita said the country’s low inflation and strong peso also helped shield the economy from the global market slump.

"What’s happening in the stock exchange trading in China and the US will not have too much impact or negative impact on the stock market trading in the Philippines," Ermita said.

"It (trading in the Philippines) is expected to recover in the next few days," he said.

More rate cuts from Napocor in coming weeks The Philippine Star 03/01/2007

More rate cuts from the National Power Corp. (Napocor) are expected in the coming weeks even as President Arroyo asked her economic managers yesterday to work with Congress to enable consumers to "immediately feel" the reduction of power rates to be implemented by the state firm.

Speaking at a televised roundtable discussion on inflation, Mrs. Arroyo said the cut in power rates is part of "the great story of economic gains flowing down to the people."

"This is a timely harvest on the seeds of fiscal discipline and good governance that we have planted in the field of optimism and hope," she said.

"This is a clear and compelling reason for all of us to stay the course we have begun, and not be distracted by the pullback of destructive politics."

Mrs. Arroyo ordered Energy Secretary Raphael Lotilla to ask the Joint Congressional Power Commission to amend the implementing rules and regulations of the Electric Power Industry Reform Act of 2001 to speed up the implementation of power rate reductions.

"Of course in a rate increase, you have to be very, very careful and study, but who wants to fight a rate decrease?" she said.

Notices alone take 30 days as required by the IRR, she added.

However, Mrs. Arroyo said the amendments to hasten the implementation of power rate adjustments must apply only to reductions.

The so-called "universal charge" on power consumers, which the government uses to fund projects in small islands, shuld be removed, she added.

During the discussion, Lotilla announced that the price of liquefied petroleum gas (LPG) would go down by P1 per kilo next month after international benchmark prices went down by $20.

On the other hand, Executive Secretary Eduardo Ermita and Presidential Chief of Staff Joey Salceda said more power rate cuts are expected in the coming months.

"I suppose depending on the recommendation to be given by the Department of Energy (DoE), we should have more announcements on power rate reductions," Ermita said.

"This is possible because inflation rate has gone down, our peso continues to improve, the Napocor makes it purchases in dollars and therefore that would signal power rate reduction and we are hopeful this continues to happen."

Ermita said the government wants to reduce further the cost of power.

"So it would be affordable and they’ll (households) have genuine savings and buy something else to improve conditions of the family.," he said.

Napocor asked: speed up reduction of power rates

Meanwhile, the Semiconductor and Electronics Industries in the Philippines (SEIPI) has urged Napocor to fast track the expected reduction of its power rates due to the improvement in the peso-dollar exchange rate.

If divided across its 33,694 gigawatt hour (gWh) sales in 2005, the electricity consumers stand to benefit rate reduction of up to P2.39 per kilowatthour (kWh) to reflect improved currency costs that year alone.

SEIPI executive director Ernesto B. Santiago said the reduced rates of Napocor would help many businesses in the country to regain global competitiveness.

Santiago has also called on the government to push for this power rate reduction as this will benefit not only the businesses but also the consumers.

In 2005, Napocor, based on its financial statement, recorded forex gains amounting to P78.742 billion.

Last year, the power firm reported that it logged P90 billion net income; the chunk of which was also due to forex gains that must be passed on as rate cut in electricity bills.

The Energy Regulatory Commission (ERC) said they expect electric prices to go down with the peso appreciation.

One of the recovery costs, passed on to consumers whether increase or decrease, is the incremental currency exchange rate adjustment (ICERA).

"The public had been expecting reduction in rates as the Philippine currency exchange rate gets better, however, the directive does not reflect yet said

improvement for it covers earlier billing periods," ERC chairman Rodolfo Albano Jr. said.

The ERC has ordered Napocor to lower its rates effective February this year to reflect the reduction in purchased power and fuel costs under the generation rate adjustment mechanism (GRAM) and ICERA.

Presidential chief of staff Joey Salceda, on the other hand, said Malacañang wants to cut power rates to encourage investors to pour in much-needed capital into the country.

Salceda said the Philippines’ competitiveness dropped to 49th rank in 2005 from better performing year at 31st slot in 1996.

Oone of the major factors that affect investor’s appetite is infrastructure and high power costs, he added.

If the Electric Power Industry Reform Act (EPIRA) policies would be followed, the power cost could drop to at least P5 per kWh. At present, the average electricity rate cost is at P7 to P9 per kWh, Salceda said. - Paolo Romero, Donnabelle Gatdula

Chief News Editor: Sol Jose Vanzi

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