Rising debt, limited power infrastructure, and legislative populism

Writing political commentary in this column is something that I avoid because it is not my focus of regular research, but the recent drama and political coup at the Philippines Senate made me come up with this piece for my column. And I support the observation of many other columnists that what is happening at the Senate is disgusting.

Two sets of data here show that the current breed of legislators at the Senate (and also at the House of Representatives) are just elections-oriented and are interested in subsidies-expanding populism, and not taxpayers-sensitive and industrialization-oriented.

1. Our rising Debt/GDP ratio since 2020 lockdown. New subsidies and freebies are created or expanded without cutting or abolishing existing subsidies that do not work in reducing poverty. Politicians, both national and local, spout and promise new subsidies and freebies during the campaign period without regard for the overall fiscal condition that is worsening.

Our Debt/GDP ratio of 65% in 2005 (the Gloria Macapagal Arroyo administration) went down to 48% in 2010, and down further to 40% in 2015 (the Benigno Aquino III administration), sinking to 37% in 2019 (during the first half of Rodrigo Duterte’s administration). It then quickly jumped to 52% in 2020 during the horrible COVID lockdown (also during Duterte’s term), and further increased to 59% in 2025 under President Ferdinand Marcos, Jr.’s administration. In contrast, Vietnam showed fiscal discipline and even reduced its Debt/GDP ratio in 2025 (see Table 1).

2. Most legislators are too focused on reducing power prices via political optics when the bigger problem is limited power infrastructure, limited supply and transmission while power demand keeps rising.

In 2024, the Philippines’ total power generation was only 130 terawatt-hours (TWh) compared with Malaysia, which has a smaller population, which produced 214 TWh; Vietnam’s 304 TWh; and South Korea’s 625 TWh. Environmental activists and legislators want the early decommissioning of our existing coal plants and a prohibition on building new ones. But our coal generation in 2024 was only 79 TWh while that of greenie Germany was 106 TWh; Australia’s was 127 TWh; Japan’s was 300 TWh. The US’s coal generation that year was 712 TWh or nine times that of the Philippines, while China’s was 5,828 TWh or 73 times that of the Philippines.

Our power generation is restricted because cheap new baseload coal is restricted while unstable solar and wind power (with no battery and which have expensive auction prices) are being rushed and given priority dispatch.

On the transmission side, in 2025 the Philippines had only 23,110 kilometers of transmission lines (23,379 km according to official data from the National Grid Corp. of the Philippines or NGCP), mainly because of our archipelagic geography. It is costly to connect many islands (Luzon-Leyte, Leyte-Bohol-Cebu, Panay-Negros-Cebu, Mindanao-Visayas, etc.), and one has to deal with many bureaucracies when it comes to right of way acquisitions, a limit to capex recovery from regulators, etc. In contrast, Thailand has 40,300 km, Vietnam has 61,900 km, and Japan has 180,000 km (see Table 2).

Nonetheless, there was big improvement in our transmission system, from only 24,214 megavolt-ampere (MVA) in 2008 (pre-NGCP franchise) to 44,145 MVA in 2025 resulting in 182% in power delivery capacity and a 85% decrease in power outages.

Combine or add these: limited power generation + limited transmission facilities + high power demand = low power reserves (especially in Visayas grid), and prices go up.

And there are additional subsidies and charges in our monthly electricity bill, like universal charge for missionary electrification (UCME), ancillary services charge in transmission, FIT-All, and GEA-All or green charges, local taxes and franchise taxes, and the subsidy to lifeline households.

Many legislators blame the private generation companies, blame private distribution utilities, blame the transmission operator, and want more price control to all of them, blame the VAT and push for the abolition of VAT on electricity.

Responsible legislators focus on the factors that restrict cheap baseload generation, that restrict faster transmission lines across islands and provinces, that add more unnecessary charges and high taxes. The VAT in electricity should stay, but the VAT rate should be cut to 8-10%, and all exemptions should be removed except those on raw agriculture products.

For three weeks now, the Visayas grid has been experiencing daily yellow alerts (raised when the operating margin of the power grid is insufficient to meet transmission requirements), especially between 4 p.m. and 10 p.m. There have been continued forced outages of the major coal plants TVI in Cebu and PEDC unit 3 in Iloilo. These two coal plants have worked hard over the last decade and saved the Cebu, Negros, and Panay islands and provinces from daily blackouts. Now they are experiencing some industrial fatigue but are being repaired.

The solution is the expansion of these big coal plants and adding small LNG plants to any of these three big islands, plus in Boracay, Bohol, Guimaras, Masbate, Marinduque, Romblon, and other off-grid areas. The solution is not decommissioning these coal plants and replacing them with intermittent solar and wind power.

There is ongoing or planned expansion of TVI in Cebu and PEDC in Iloilo, and these should proceed without delay. I checked with the NGCP: these expansions can be accommodated by the Visayas transmission system, which is good.

So combine these: elections-oriented legislators, subsidies-populist political programs with no regard for the overall fiscal condition, politics-driven electricity pricing instead of reserves expansion to bring down prices. That kind of political culture can produce the sort of political drama that is happening in the Senate.

The President, the Executive Secretary, and other Cabinet officials can take the lead in changing the political culture. Change it to a culture of fiscal discipline and responsibility, self-reliant citizens and not state-dependent ones, and industrialization-oriented politics and economic agenda.

Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an internationa fellow of the Tholos Foundation.

minimalgovernment@gmail.com