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The power industry in the Philippines is undergoing restructuring and moving toward privatization of nearly all the sector. Fiscal pressures have played a major role and the process is scheduled to take some 25 years. The Philippines aims to reduce dependence on imported fuel and the importance of gas will be boosted. Foreign companies are to play a major role in constructing new capacity. Privatization is seen as a route to efficiently as well as reducing pressure on taxpayers.

The Philippines has undertaken a large-scale privatization program with receipts at over $3 billion annually. This has helped the government achieve a budget surplus, but the program has encountered some obstacles. The Food Terminal sale in Jun 1997 did not attract bidders and collapsed, and there is also a debate as to what should be privatized. The government aims to privatize water and the power industry and aims to attract investment in this way. There is concern about the impact of presidential elections on the privatization program.

The Philippine privatisation programme has reached a phase where it is more of a policy commitment than merely a way of solving a budget deficit. The programme began in 1992, and most industrial assets have been privatised. Secretary of State for Finance Roberto do Ocampo says that privatisation is the core of the government's vision, and the aim is to transfer as much of the state sector as possible to the private sector. This programme has moved into the 'third wave' of privatisation, with government social security funds and pensions on the sale list.

The Philippines began a privatization program in 1987, generating $4.5 billion to 1994 including a 60% stake of Petron Corp, with 40% of this sold to Saudi Arabian Oil Company (Aramco). Funds from privatization are being used to reduce the budget deficit, and the implementation of value added tax is scheduled for Oct 1994, which will further reduce the deficit. Aramco is helping to develop Petron as an exporter, and the local petroleum industry is also undergoing deregulation.

The government of the Philippines has already raised more than 735 million pounds sterling from its privatisation programme, and still has some valuable assets to dispose of. These include National Steel Corp and National Power Corp (Napocor). The next disposal will be the famous Manila Hotel, which is currently owned by Government Service Insurance System (GSIS) through its Manila Hotel Corp.