Foreign exchange and the price of electricity given the Philippine power industry reforms

Rheal M. Molato

College

School of Economics

Document Type

Archival Material/Manuscript

Publication Date

10-2007

Abstract

This paper examines foreign exchange as a determinant of high prices in an electricity generation industry going through reforms towards privatization and deregulation. It is found that exchange rate movements influence electricity prices through imported fuels but more notably through payment of foreign-currency denominated liabilities. This financing aspect stands out because of the difficulty in obtaining domestic funding. This paper notes that generating investments is imperative for the power sector reforms to attain their objectives.

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Disciplines

Economics

Keywords

Electric utilities—Philippines; Electric utilities—Rates—Philippines; Foreign exchange rates—Philippines

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