Psalm's napalm

DIE HARD III

Herman Tiu Laurel

7/4/2011

The Power Sector Assets and Liabilities Management (Psalm) Corp. is getting ready to drop the deadliest napalm of all electricity rate increases--the Universal Charge.  It’s even hiring an expensive foreign PR firm to assist in softening the blow for the Philippine power consumers’ “kill.”

 

Weber Shandwick, “a leading global public relations agency with offices in 74 countries around the world” will be contracted supposedly to produce a coffee table book on Psalm; but only God knows why the public power agency needs a coffee table book, much less a PR outfit.

 

Psalm is seeking a P75-billion loan for its operations, on top of the $18-billion National Power Corp. (Napocor) debts it still has to pay and its push for Energy Regulatory Commission (ERC) and Joint Congressional Power Committee approval of a P0.39/kWh power rate hike for 25 years to cover P139 billion in Napocor “stranded costs” for $18 billion, or around P800 billion worth of debts that resulted from several independent power producer (IPP) contracts signed by the Cory, FVR, and Arroyo administrations.  But that’s only the beginning.  The balance of P640 billion will still have to be settled which, translated, means P1.60/kWh more in future rate increases.

 

While these are happening, the Manila Electric Co. (Meralco) has just obtained a rate increase for its third Performance Based Regulation (PBR) rate of P1.58/kWh, or around P0.80 over the original Return-on-Rate Base (RoRB) set price of P0.70/kWh.

 

Such radical increases in the ERC-approved rates for Meralco must be tremendously boosted by that part of Meralco’s capex (capital expenditure) budget called “Regulatory Liaison” amounting to P437 million (as uncovered by our colleague Butch Junia) submitted to the ERC and included in the charges to its five millions customers.

 

Yes, dear readers, based on this thoroughly lopsided PBR scheme, we power consumers advance our hard-earned money for the capital of Meralco, which under normal circumstances ought to be shouldered by its so-called “investors” (the latest tri-media oligarch, the leading food and beverage giant, a front company of some big politician known as New Frontier, and some other Big Business players). With a P437-million fund extracted from our advances to Meralco, the power company should have no problem “liaising” with the four ERC commissioners.

 

But where did all the privatization proceeds of Napocor and its National Transmission Co. (TransCo) spin-off go? In the first half of 2009, Psalm, which was created to takeover, manage, and privatize Napocor assets, reported $10.5 billion in proceeds from privatization. Two years later, with over 80 percent of Napocor’s power plants having been sold, and with some reports saying that the sale has already reached $18 billion, they still expect us to believe that the debt today stands at $16.5 to $18 billion, practically unchanged from 10 years of the Electric Power Industry R(D)eform Act (Epira)’s frenzied privatization, which was railroaded in Congress supposedly to wipe out Napocor’s debts?

 

The latest Ibon Foundation study reports that “Psalm has already shelled out $18 billion to settle the obligations of Napocor from 2001 to 2010… (with) $6.7 billion (going) to principal amortization; $4.3 billion for interest payments; and $7 billion for obligations to independent power producers (IPPs).”  Oh yeah… and we still have all this debt.  What magic, what scam is this?!

 

Ibon explains, “the financial bleeding of Napocor continued under Epira because the law legitimized the onerous contracts signed by Napocor with the IPPs such as the take or pay provisions.”  It must be said again that Epira was approved by a Sonny Belmonte lameduck Congress under the power-grabbing Gloria Arroyo regime.  It was a law egged on by the Asian Development Bank (ADB) which dangled some $300 million for its approval.  The result: 10 years and $16.5 to $18 billion of our lost resources.

 

Going by the Psalm plan, which it hopes will remain unnoticeable, the P0.39/kWh increases will be staggered every so often over the next decades until our grandchildren’s children will still be paying for that wretched Universal Charge. This burden on the national economy will continue to scorch our future, just as the US ’ napalms in Vietnam still render large tracks of that country’s mountains and countryside inhospitable.

 

I am one with Ibon’s conclusion, “The only way out of this debacle… is to cancel the onerous debts of Napocor and halt its privatization by repealing the failed Epira.”

 

Unfortunately, another group in the struggle against this power piracy, the Freedom from Debt Coalition (FDC), was more dilute in its recent summit. Though condemning the Epira’s dire consequences, its official press release said: “FDC (is) still in the process of putting the finishing touches to the summit recommendations.  The group said (it) will seek an audience with (BSA III) and the Joint Congressional Power Conference once the proposals are finalized.” This is the problem when a supposed NGO has a collaborationist alliance with a government that is clearly in cahoots with the ruling oligarchy.

 

While we have high respects for our colleagues there such as Wilson Fortaleza, Bobby Diciembre et al., the influence of the corrupt Akbayan heirs of Etta Rosales (Gloria Arroyo’s congressional sidekick in her 2004 “witching hour” election proclamation) is warping the group’s perspective.

 

The Filipino people must demand for the return of the nation’s power generating assets--from fossil fuel, to geothermal, to hydro--back to their fold.  They, the People, will then reimburse those so-called investors’ expenses with whatever profits and (in the same manner as the assets were privatized) on installment basis--but only after all the real costs are assayed. Then, the basis for setting electricity rates will have to be brought back to the old RoRB and should never be higher than the median rates in Asia . New power projects shall likewise be borne by the State, capitalizing on the $30-billion Special Deposit Account held by the Bangko Sentral ng Pilipinas (BSP) that is only lying idle while it is being milked by the IMF (International Monetary Fund)-World Bank, ADB, and BSP “banksters.”

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