Philippines Sweating Out Power Outages : Infrastructure: The government needs $23 billion in foreign investment to complete an ambitious plan to rebuild power-generating capacity.

When the first major power outages hit the main Philippine island of Luzon in 1989, few Filipinos could have predicted the havoc still to come over the next four years.

As blackouts became commonplace, crime and traffic accidents increased on darkened streets. Tempers now flare in Manila as residents endure tropical heat without air conditioning. And a number of factories and workshops--unable to rely on a power source--have closed, killing jobs and crippling productivity nationwide, economists say.

“It’s been devastating,” said Rufino Bomasang, the Philippine energy undersecretary.

Now relief appears in sight. The Philippine government is in the midst of a $35-billion crash program to revamp its long-neglected energy infrastructure. But it needs foreign investment--about $23 billion--to complete the plan over the next 22 years.

Last week, a delegation of Philippine energy officials visited Los Angeles and Houston to enlist U.S. firms, including public utilities, in the government’s energy plan.

“In meeting the crisis at home, we are looking for increased participation from the private sector abroad,” Bomasang said in a telephone interview.

Poor planning and neglect during the regime of the late President Ferdinand Marcos are responsible for the current energy crisis, observers say. Demand grew in the 1980s along with the nation’s population and industries such as semiconductors and garment making.

By 1989 demand outstripped supply, and widespread blackouts began.

Today, most power plants using coal and oil for generation are at least 15 years old and suffer from years of poor maintenance, the government says. In addition, a severe drought has hampered efforts to generate hydroelectric power.

As a result, Filipinos who live on Luzon cope with a “brownout schedule” that shuts off power for up to two hours a day. Although most planned outages affecting businesses occur at night, the shortage continues to erode productivity.

Businesses could lose up to $2 billion this year because of the power shortage, according to a report by the U.S.-ASEAN Council for Business and Technology Inc., a trade group. Up to 3 million Filipinos could work shorter hours or lose their jobs because of outages, economists say.

In a move to end the crisis, Philippine President Fidel V. Ramos has used emergency powers to raise electricity rates and speed the building of new power-generating facilities. Ramos also overhauled the state-controlled power agency, which was dogged by charges of corruption and mismanagement.

For the longer term, Ramos has enacted a plan to tap into the country’s wealth of geothermal energy and to reduce dependence on foreign oil. Imported fuels make up about 70% of the primary energy supply.

But to fully exploit the nation’s resources at home, the Philippines must court overseas investors, experts say.

“They just don’t have the engineers, architects and manufacturing industry to do it by themselves,” said James A. Schill, West Coast director of the U.S. Agency for International Development.

Tax breaks and special agreements known as “build-own-transfer” schemes could lure companies such as Southern California Edison Co. to invest, Bomasang said.

Under a BOT arrangement, contractors build a power plant with their own money and operate it until they have recovered their costs and earned a profit specified in the agreement. The plant is then turned over to the government. Five such projects have been approved in the Philippines this year, Bomasang said.

As Philippine energy officials tried to woo U.S. firms last week, the Ramos administration moved to close the final chapter in a decade-long dispute with Westinghouse Electric Corp. over a nuclear plant built under Marcos.

Ramos tentatively agreed to drop fraud charges against Westinghouse in exchange for $49.5 million in power-generating equipment.

Safety concerns and allegations of bribery mothballed the plant after Marcos was ousted in 1986. In May, a jury cleared Westinghouse of charges that it bribed Marcos to win the contract.

“I think that is pretty much behind us now,” Bomasang said. “I don’t think the controversy surrounding it has affected our program with foreign investors at all.

“And I don’t think it will,” Bomasang said.