Serge: Economic saboteur

CONSUMERS' DEMAND!
Herman Tiu Laurel
4/2-8/2012



I cannot count anymore the many articles and columns I have written over the years for OpinYon and other newspapers on the economically devastating high power cost in the Philippines; but the issue that has festered over 10 years now still plagues the country. Last week the statistics on the region’s power prices confirm again that Metro Manila has the highest overall rates in comparison to other major cities in Asia. A study made by Australian firm, International Energy Consultants, contracted by the PCCI (Philippine Chamber of Commerce and Industry) culled the following data from the 2011 survey of JETRO (Japan Export Trade Organization):

Manila at $0.23 per kWh (kilowatt-hour); Tokyo and Singapore at $0.20 per kWh; Sydney and Cebu at $0.19 per kWh; Colombo at $0.18 per kWh; Mumbai at $0.16 per kWh; Phnom Penh at $0.15 per kWh; Hong Kong at $0.14 per kWh; Auckland and Taipei at $0.12 per kWh; Kuala Lumpur and Karachi at $0.11 per kWh; Shenzhen and Chennai at $0.10 per kWh; and Jakarta, Shanghai, Guangzhou, and New Delhi at $0.09 per kWh.

The report also explains that even if the Philippines may only be 5th or 6th highest in the Asia in terms of business power rates, the truth is, Philippine residential consumers are the ones subsidizing commercial/industrial users.

As our colleague in the Anti-Power Plunder Group Butch Junia repeatedly points out, Philippine residential power consumers constitute 67% of Meralco’s revenues but consume only 31% of its distributed power while, inversely, the much lower priced commercial/industrial users constitute 33% of Meralco’s revenues while consuming 69% of its output.

The leading and senior member of our group Mang Naro Lualhati (who was one of those who won the P30-billion Meralco refund for consumers in 2003) charges that the giant malls owned by Filipino billionaires listed in the Fortune 500 pay as low as $0.005 per kWh compared to $0.23 per kWh for us poor ordinary folk.

The power price issue came to a head again the past two weeks because the recent Mindanao electricity blackouts have already brought massive economic damage to that major Philippine island. As this electricity shit has hit the fan, with the stench of the power oligarchs reeking all over the place, now, even government officials--from city mayors and governors, to congressmen and senators--are speaking out against this “intentional” power crisis. For the people of Mindanao, it is clear that this “artificial shortage” is designed to force them into signing 20-year long-term IPP (independent power producer) contracts with rates that are astronomically higher than what they have been used to with their hydroelectric plants. Their only problem is, successive Yellow regimes--from past to present--have been “Noynoying” on the issue, particularly with the proper maintenance of these plants as what common sense dictates.

The NGCP (National Grid Corp. of the Philippines), the privatized power transmission backbone of the country, has been fingered as a major culprit in the current crisis. Mindanao politicians suspect that the NGCP is creating a situation that will force the privatization of the Agus-Pulangi hydro system to enable it to link this to the grid and sell its hydroelectric power, which now costs only less that P0.01 per kWh, at par with the Visayas and Luzon level of P5 per kWh. You will read and hear echoes of this plan from the Senate’s energy committee chair Serge Osmeña who reiterates one lie after another to continue justifying the EPIRA (Electric Power Industry Reform Act).

Osmeña, who has picked up the cudgels to defend the present privatized national electricity structure, openly says the Agus-Pulangi should not be allowed to compete with the privatized power utilities; hence, he’d rather raise the rates of hydroelectricity to support the expensive rates of the private utilities.

The argument for the EPIRA when it was proposed was that the state-owned Napocor (National Power Corp.), with its monopoly of the power industry, was too big to be efficient.

Yet today, in defending Energy Secretary Rene Almendras’ disastrous handling of the Mindanao power crisis, Osmeña speaks of “economies of scale” where “electricity would be cheaper for everyone if distributed over a bigger transmission grid than a smaller one.”

Why the shift in tone, Serge? Is it because much of the elite--a class to which you belong--have already formed an oligopoly in the sector and are using their clout to blackmail the entire nation into swallowing the “highest power cost in Asia?”

To wit, Osmeña even argues, “The national reform policy on electricity… was to harness the finances and management talents of the private sector in ensuring that the country would be supplied in a timely manner with dependable, quality and reasonably priced power…”

Independent Power Producers (IPP) are private utility companies established on the basis of state “sovereign guarantees” and/or securitization of captive consumers’ aggregate payments in a contract period. Securitization comes in “the form of financial instruments used to obtain funds from… investors… backed by amortizing cash flows;” while these cash flows, in turn, are derived from the pockets of millions of electricity consumers. Securitization was done by the Republic of the Philippines to launch the Napocor; and as government did not shell out any money, only acting as an intermediary of the funds from power consumers, the power sector has NEVER been subsidized.

When Napocor was still in control of the state’s power assets, the price of Philippine electricity was not only competitive but one of the lowest in Asia. Today, after privatization, power costs have shot up way into the stratosphere.

In Mindanao today, we see the IPPs blackmailing consumers the way the privatized Aboitiz Group Power Barges 117 and 118 and the now Lopez-run Mt. Apo Geothermal are being used to force Mindanaoans into accepting 20-year, exorbitantly priced contracts or else continue being denied much-needed electricity. But isn’t price a reflection of these privatization advocates’ much-vaunted “efficiency?” Therefore, aren’t they and other utilities like Meralco guilty of doing their jobs at a very high cost to the nation and, in fact, destroying its entire economy?

Given that these oligarchs are only “efficient” from the point of view of profit extraction, and totally delinquent in providing efficient and reliable electricity at the least cost to consumers, why should we accept this, especially since things have gone from bad to worse despite 90 percent of the power sector being privatized?

Ah, but Osmeña remains undaunted. He says “Napocor was bankrupt and that even if it sold all of its assets, it still could not cover its liabilities.”

Napocor was a very healthy public corporation before Cory Aquino, her Yellow gang, and her oligarch-patrons took over the reins of the Philippine Republic. They abolished the Ministry of Energy and placed its functions under the Office of the President to ensure an efficient dismantling of the nation’s energy development program. They established almost a dozen IPPs and cancelled half a dozen major energy projects, including the Bataan Nuclear Power Plant, leading to a “Dark Age” under a Cory-appointed oligarch, Ernesto Aboitiz, as Napocor head. Then Ramos signed 43 more plundering IPP contracts with the infamous PPA (power purchase agreements), causing the most massive bloodletting of Napocor’s resources to this day, via $18-billion so-called stranded debts that EPIRA was supposed to erase but never did. Meanwhile, $10 billion worth of privatized assets payments have not yet been received.

Still, Osmeña isn’t alone in his prevarication. The current House Speaker, Sonny Belmonte, when pressed for a response to the crescendo of complaints from Mindanao lawmakers, said, “We have to investigate (the power crisis) to know what is going on.” Considering who the distribution source of the EPIRA congressional payola in 2001 really is, I’d say Belmonte is merely humoring us.

On a slightly positive note, despite my earlier falling out with the elder Sen. Nene Pimentel’s over his signing of the EPIRA, I am hopeful that the younger Pimentel will take up the energy cause in the Upper Chamber this time. My only concern is that he may have weakened his position this early when he stated, “If I need to personally beg to Sen. Osmeña to hold the inquiry before the Holy Week break, I will have to.”

First, Koko, you don’t have to beg; your duty lies with the people. You have all the right to demand what is fair and just. Secondly, expecting someone like Osmeña to investigate the power crisis is like assigning a blood bank heist to be investigated by a vampire where other vampires are suspect.

The Senate, if it is to do a real service to the people, should investigate the power mess as a whole and prosecute those to be found guilty in the “intentional” and “artificial shortage,” charging them with no less than “economic sabotage.” And if our senators will just do their jobs right, I would not be surprised if Serge and his oligarch kin, along with his NUCD-UMDP comrade Fidel Ramos, will end up as guilty.

(Tune in to 1098AM, DWAD, Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m.; watch Destiny Cable GNN’s HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m., on “Mindanao power blackmail? Part II;” visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)