BACKBENCHER
Rod P. Kapunan
4/21-22/2012
The privatization of the power industry, as the neo-liberals would articulate, marked the culmination of the private sector's partnership with the government. It was a partnership anchored on the validity of the capitalist system; that only the private sector, specifically the privatization of the power industry, could bring about the desired efficiency in power supply, reduce the cost of electricity, assure the public of continuous supply, create more industries, promote employment, and residually bring about prosperity to the nation through increased revenues.
Indeed, that was how the advocates simplified the theoretical consequence of privatization, insisting it could reach its maximum efficiency only under an era of complete deregulation. There was little room for doubt because, as they would say, the economy revolves wholly on common sense; that one can never stop the downstream flow of the river. As their high priest would often remind us, water will always seek its own level, but failing to draw the line that often, common sense seldom matches reality.
For that we swallowed hook, line and sinker that policy because the theory promised to delivery efficiency on the basis of an unregulated power industry. Nobody mentioned the system was at the outset bound to fail much that it was based on a defaulted economic proposition; that efficiency must always come in at a price but given a nomenclature called incentive. The maximization of efficiency was made synonymous to the maximization of profit
Given the present situation, unless we do something to put a stop to the madness of privatizing the power industry, we are bound to end up having an unimaginable power crisis that could unavoidably plunge the country into the abyss of economic "darkness" that could even trigger widespread unrest.
Thus, when the government let go the cascading demand to privatize and deregulate the power industry, no doubt gargantuan profit was no sooner realized. The spirited drive for efficiency by the owners, operators, and all those involved in the power industry emerged as new class of barons called "power industry barons."
More than that, government's patronage to their policy opened the Pandora's Box of the evils inherent in that system. They failed to foresee that deregulation and privatization were self-defeating propositions, for they will inevitably usher in cut-throat competition; result in the over-supply of energy more than the requirement by a given franchise area; and could result in price manipulation amplified by the pricing in the Wholesale Electricity Spot Market. All that has led to the unmitigated upward movement in the price of electricity.
Investment itself has been affected, with some even asking the government to pitch in. The symptoms are now written on the wall by the long hours of brownout, while the suffering public is conscious that power outage is being carried out with seeming impunity to pressure on the government to give in to their demands.
The worse thing about the present power crisis is that neither the producers of electricity nor the government, standing as wholly behind the policy, does not have the capacity and the political will to reduce the cost of electricity. The whole issue now revolves around the urgency to promote efficiency while allowing the producers of electricity to continue to rake in their huge profit. They stick to their old formula by insisting in privatizing the remaining state-owned power plants because they are in fact against any form of competition. They already commingled and irreversibly integrated their high cost of production that to unbundle them now is to wreck the intricate system that generated huge profit in the name of efficiency.
They would rather allow the people to bear the cost and suffer than to reduce the cost of electricity which they cannot do because of our inflation-based economy. That becomes a serious problem because the malaise is affecting the cost of investment. The negative effect of glut in the supply of power is seriously jeopardizing the cost to produce per kilowatt hour that is debilitating to many of the country's downstream industry, notwithstanding that many of them survive on a marginal profit basis.
This explains why the advocates of privatization and deregulation are running out of logic; it now taps the government as their own counsel – that the final solution to the problem is the elimination of inter-industry competition represented by the competition put up by the remaining state-owned generation plants operated by the National Power Corporation.
They want state-owned power plants to be finally eased out despite the truth that none of their promises was fulfilled, and on the contrary the country today stands as the highest in terms of cost in electricity. Because the public have become suspicious, they tapped the government of President Aquino to join them in blackmailing the consumers. As Mr. Aquino ignorantly stressed, the consumers should learn how to pay the cost, forgetting that just like the producers of electricity they too suffer from losses by the inability to pay.
Indeed, that was how the advocates simplified the theoretical consequence of privatization, insisting it could reach its maximum efficiency only under an era of complete deregulation. There was little room for doubt because, as they would say, the economy revolves wholly on common sense; that one can never stop the downstream flow of the river. As their high priest would often remind us, water will always seek its own level, but failing to draw the line that often, common sense seldom matches reality.
For that we swallowed hook, line and sinker that policy because the theory promised to delivery efficiency on the basis of an unregulated power industry. Nobody mentioned the system was at the outset bound to fail much that it was based on a defaulted economic proposition; that efficiency must always come in at a price but given a nomenclature called incentive. The maximization of efficiency was made synonymous to the maximization of profit
Given the present situation, unless we do something to put a stop to the madness of privatizing the power industry, we are bound to end up having an unimaginable power crisis that could unavoidably plunge the country into the abyss of economic "darkness" that could even trigger widespread unrest.
Thus, when the government let go the cascading demand to privatize and deregulate the power industry, no doubt gargantuan profit was no sooner realized. The spirited drive for efficiency by the owners, operators, and all those involved in the power industry emerged as new class of barons called "power industry barons."
More than that, government's patronage to their policy opened the Pandora's Box of the evils inherent in that system. They failed to foresee that deregulation and privatization were self-defeating propositions, for they will inevitably usher in cut-throat competition; result in the over-supply of energy more than the requirement by a given franchise area; and could result in price manipulation amplified by the pricing in the Wholesale Electricity Spot Market. All that has led to the unmitigated upward movement in the price of electricity.
Investment itself has been affected, with some even asking the government to pitch in. The symptoms are now written on the wall by the long hours of brownout, while the suffering public is conscious that power outage is being carried out with seeming impunity to pressure on the government to give in to their demands.
The worse thing about the present power crisis is that neither the producers of electricity nor the government, standing as wholly behind the policy, does not have the capacity and the political will to reduce the cost of electricity. The whole issue now revolves around the urgency to promote efficiency while allowing the producers of electricity to continue to rake in their huge profit. They stick to their old formula by insisting in privatizing the remaining state-owned power plants because they are in fact against any form of competition. They already commingled and irreversibly integrated their high cost of production that to unbundle them now is to wreck the intricate system that generated huge profit in the name of efficiency.
They would rather allow the people to bear the cost and suffer than to reduce the cost of electricity which they cannot do because of our inflation-based economy. That becomes a serious problem because the malaise is affecting the cost of investment. The negative effect of glut in the supply of power is seriously jeopardizing the cost to produce per kilowatt hour that is debilitating to many of the country's downstream industry, notwithstanding that many of them survive on a marginal profit basis.
This explains why the advocates of privatization and deregulation are running out of logic; it now taps the government as their own counsel – that the final solution to the problem is the elimination of inter-industry competition represented by the competition put up by the remaining state-owned generation plants operated by the National Power Corporation.
They want state-owned power plants to be finally eased out despite the truth that none of their promises was fulfilled, and on the contrary the country today stands as the highest in terms of cost in electricity. Because the public have become suspicious, they tapped the government of President Aquino to join them in blackmailing the consumers. As Mr. Aquino ignorantly stressed, the consumers should learn how to pay the cost, forgetting that just like the producers of electricity they too suffer from losses by the inability to pay.
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