Cebu is one of the most developed provinces in the Philippines, boasting its status as the most developed and richest province for 9 years straight in 2023. The province was able to transform into a global business hub for processing services, transportation, mining, water, tourism, shipping, and thriving in various industries in only a decade. In 2022, Cebu’s asset value was P235.73 billion, with an increase of P20.43 billion compared to P215 billion. Amidst the feats of rapid development, Cebu is anticipating energy insecurities, which makes the next 3-4 years for Cebu critical. Businesses in Cebu grew weary and concerned as the Department of Energy raised Yellow Alert in the Visayas region due to lower energy reserves last May 2023.
Cebu’s Driving Force of Economic Prosperity
Tourism is one of the vital driving forces of Cebu’s economy which led them to rapid prosperity, marking them on the map as one of the most developed and richest provinces for 9 consecutive years in 2023. Cebu’s extraordinary tourist spots, such as their breathtaking scenery of mountains, stunning beaches, historical sites, and bright festivals, has ranked the province number one (1) as a preferred destination for tourists in the Department of Tourism (DOT) nationwide survey.
Another key drivers of Cebu’s economy is the Information Technology-Business Process Management (IT-BPM) industry.
For numerous years, IT-BPM has consistently stood out as a primary source of employment in Cebu, positioning the island as a leading choice for outsourcing firms on a global scale. As of 2020, workforce estimates from Pert Cabataña (Cebu IT BPM.Organization (CIB.O) president) revealed a notable increase, with the industry employing approximately 180,000 to 190,000 individuals, surpassing the figure of 170,000 reported two years prior. According to Philippines News Agency
According to Statista, In 2022, the IT-BPM sector in the Philippines amassed approximately US$ 32.5 billion in revenue, marking a notable uptick from the preceding year. Forecasts indicate a sustained growth trajectory, with expectations of reaching around US$59 billion by 2028.
The IT-BPM industry in Cebu has
Power Outages in Cebu
In early January this year, Panay Island experienced a power shortage which raised concern of similar shortages along nearby areas of Cebu, according to Cebu Daily News. As a global business activity center and a major hub of energy consumption in the Visayas region, this alarming situation has caught the attention of locals and established businesses in Cebu. Despite recent events and the state of Yellow Alert in the Visayas region, officials from Department of Energy – Visayas Field Office Division (DOE-VFOD) and Energy Regulatory Commission (ERC), proclaimed that Cebu is not at risk of power outages as long as it strikes a balance between power supply and demand.
As locals and businesses grow weary of recent energy interruptions, it places already-established businesses and potential investors in a shaken position.
Power Outages Effect on Businesses
Power outages can have devastating effects on businesses, disrupting operations and causing financial losses. Here are some of the key impacts of power outages for businesses:
Financial Losses
Power outages result in lost revenue for businesses, as they are unable to operate machinery, serve customers, or process transactions. This loss of income can significantly impact the financial stability of businesses, particularly small and medium-sized enterprises (SMEs), which may lack the resources to weather prolonged outages.
Disrupted Operations
Without electricity, businesses cannot carry out essential tasks such as manufacturing, data processing, and communication. This disruption in operations can lead to delays in production and service delivery, affecting customer satisfaction and damaging business reputation.
Increased Operational Costs
To mitigate the impact of power outages, businesses may need to invest in backup power solutions, such as generators or uninterruptible power supply (UPS) systems. These additional expenses can strain already tight budgets, particularly for small businesses operating on narrow profit margins.
Supply Chain Disruptions
Power outages can disrupt the supply chain by affecting transportation, logistics, and distribution networks. Delays in receiving raw materials or shipping finished products can disrupt production schedules and increase costs for businesses.
Long-Term Economic Impact
Power outages can have broader economic implications for local economies and communities. Disruptions to businesses can lead to job losses, decreased tax revenue, and reduced economic growth, impacting the overall prosperity and well-being of the region.
Power Outages Effects on Tourism
Disrupted Travel Plans
Power outages can disrupt travel plans for tourists, affecting transportation services such as airports, trains, and buses. Flight delays, cancellations, and disruptions to public transportation schedules can inconvenience tourists and disrupt their itineraries.
Closure of Attractions and Accommodations
Power outages may force tourist attractions, hotels, restaurants, and other hospitality establishments to close temporarily. Tourists may be unable to access popular attractions, dine at restaurants, or find suitable accommodations, leading to disappointment and frustration.
Negative Perception and Reputation Damage
Power outages can create a negative perception of a destination among tourists, affecting its reputation as a travel destination. Tourists who experience power outages during their visit may share their negative experiences on social media and travel review websites, deterring potential visitors and damaging the destination’s image.
Economic Losses for Tourism Industry
Power outages can result in significant economic losses for the tourism industry, including lost revenue for businesses, reduced tourist spending, and decreased tax revenue for local governments. Tourist-dependent businesses such as hotels, restaurants, tour operators, and souvenir shops may experience financial hardships due to decreased visitor numbers and spending.
Safety and Security Concerns
Power outages can pose safety and security concerns for tourists, particularly in unfamiliar or remote destinations. Darkened streets, malfunctioning security systems, and limited access to emergency services can compromise tourist safety and contribute to feelings of unease and insecurity.
Damage to Tourism Infrastructure
Power outages can cause damage to tourism infrastructure such as roads, bridges, airports, and telecommunications networks. Repairing and restoring infrastructure can be costly and time-consuming, further disrupting tourism operations and deterring visitors from returning to the destination.
Power Outages Effects on the Local Resident of Cebu
Disruption of Daily Life
Power outages disrupt the daily routines and activities of locals in Cebu. Without electricity, households may struggle to perform essential tasks such as cooking, refrigeration, and lighting, leading to inconvenience and discomfort.
Impact on Health and Well-being
Power outages can have adverse effects on the health and well-being of locals in Cebu. Lack of access to electricity can compromise medical care, particularly for individuals reliant on medical devices or equipment that require electricity to function. Additionally, extreme temperatures during outages can exacerbate health issues, especially for vulnerable populations such as the elderly, children, and those with chronic illnesses.
Safety Concerns
Power outages raise safety concerns for locals in Cebu, particularly during nighttime or in areas with inadequate street lighting. Darkened streets and neighborhoods can increase the risk of accidents, crime, and other security threats, causing anxiety and fear among residents.
Impact on Education
Power outages disrupt education for students in Cebu, affecting both in-person and remote learning. Schools may be forced to suspend classes during outages, leading to missed instructional time and delays in academic progress. Additionally, students reliant on electronic devices for learning may face challenges accessing educational resources and completing assignments during outages.
Work Disruption
Power outages in Cebu prevent locals from commuting to work or carrying out their job duties, leading to disruptions in employment and income. Without electricity, businesses may be forced to suspend operations, resulting in temporary closures or reduced operating hours.
The Plan Against Energy Insecurity
Chief Engineer Rey Maleza of DOE-Visayas offered valuable perspectives on the dynamics of the energy sector, in which the Chief Engineer discussed the energy deficits on both businesses and tourism, about the past and recent power shortages in Panay Island.
“Aside from attracting investors of power on the supply side, we are also trying to implement programs on the demand side. Meaning to say, we have to conserve power. We have to use efficient equipment [and] you must also encourage people to use other types of resources… everything, just to avert,”
The Chief Engineer highlighted the importance of employing alternative resources like solar panels to conserve energy usage. Additionally, he stressed the importance of collaboration among government entities and different societal sectors to achieve energy security.
“Right now… we (Cebu) are still in the normal condition because pumapasok na kasi yung Mindanao… and meron tayong extra from Negros, from the solar power plant. So, walang problema for the coming days at meron tayong mga reserve,”
Conversely, Chief Engineer Maleza mentioned that Cebu presently enjoys a reliable energy supply, attributed to imports from Mindanao and excess from Negros.
Yet, he acknowledged the dangers posed by unforeseen outages and advocated for improved grid connectivity and a broader array of energy sources.
“The Mindanao connection [to] Cebu, tapos na and it’s operating right now although sometimes on and off siya… but it’s operational. Ang December natin is Cebu-Bohol dahil il-loop po natin through Leyte… Yung Cebu-Panay, it will be scheduled to be operational… this end of March,” he said.
Read more about Cebu’s need for investors to secure energy demand in the future from: Cebu Daily News
