MANILA (Reuters) - Philippine President Benigno Aquino said he would ask Congress to allow the government to enter into energy supply contracts, for the first time since the industry was privatised in 2001, to avert a looming power shortage next year.
The country, which needs 600 megawatts (MW) of new power supply before March, is set to face rolling brownouts in 2015 on the main Luzon Island - home to its manufacturing and booming call center industries as well as more than half of its 100 million people.
"Very soon we will formally ask Congress for a joint resolution that will authorize the national government to contract an additional generating capacity to address the 300 MW projected deficit," Aquino said on Thursday.
The government also wants back-up reserves of as much as 300 MW for Luzon to meet peak demand over March to May next year.
The go-ahead for a state role in the broader electricity market from both chambers of Congress, dominated by Aquino's allies, will allow the government to directly finance new generation capacity.
However, some advocacy and business groups are worried that government involvement in the industry will boost power prices like in the 1990s when former President Fidel Ramos tackled a power crisis by fast-tracking a raft of expensive projects.
"What we want is for the government to contract additional capacity for a short-term basis," Energy Secretary Carlos Jericho Petilla told reporters after Aquino's speech.
"It's more an authority to contract rather than a totalitarian emergency power," he said.
The government is in talks with potential contractors, Petilla said, adding that state agency Power Sector Assets and Liabilities Management Corp was evaluating potential deals and could sign contracts by October pending Congress' approval.
Half of the 600 MW requirement could be covered by some private generating facilities coming on stream before March and from businesses, such as mall operators, hotels and factories with large diesel-fed back-up generators, he added.
Petilla said he would seek the cheapest contracted capacity and short arrangements of up to two years, while Aquino assured the business community that the government will focus solely on addressing the projected shortage.
"We have no plans of intervening to distort the market or complicate the situation even further," Aquino told an audience of power industry officials.
(Reporting by Erik dela Cruz; Editing by Himani Sarkar)