IPP oversupply redux

DIE HARD III

Herman Tiu Laurel

5/27/2013

Daily Tribune

The country is embroiled in several major distractions, from the Hocus PCOS 60-30-10 magic to the super-extended display of BS Aquino government incompetence in the investigation of the Balintang Incident that has threatened to break Philippine-Taiwan relations, another old affliction is growing to be another major economic debacle. The disease is the power piracy cancer that visited the Philippines' Luzon and Visayas power sector is now reemerging in Mindanao. Last week the Aboitiz Power Corp. through its CEO Erramon Aboitiz, expressed fears that a potential oversupply in Mindanao in the next three to four years and reiterating the forecast by the San Miguel Corp. The worse part of the dire prognosis is that it will also be an oversupply of the wrong type of energy and at the highest cost in Asia.

The impending oversupply of electricity in Mindanao is not because the government and the private power sector have been responsive to Mindanao's power crisis but that they have both been intent in preying on the power crisis that they themselves have created for Mindanao. The government delays in rehabilitating the Agus-Pulangui hydro-electric system is the root of the Mindanao power crisis, and allowed BS Aquino to chastise Mindanaoans for complaining and telling them to accept high energy rates. This whetted the appetite of profit hungry private companies to apply and put up power projects there, but with the insistence of imposing their desired mode of energy, i.e. fossil fuel fired generations from coal to diesel fuel, over the desire of Mindanaoans for rehab of the Agus-Pulangui posthaste, development of more hydro-electric and geothermal; hence power rates will be exorbitant.

Government capture by the privatization pirates and corporate greed is the crux of the problem for Mindanaons today suffering as much as six to nine hours brownouts and now pay as high as Luzon and the Visayas when they used to pay only half that. In the midst of these issues the Aboitiz CEO's announcement of imminent oversupply of Mindanao power, Aboitiz Power Corp. just announced also last week that it closed 2012 with P 24.4-billion net income, up by 13 percent year-on-year from the P 21.6 billion in 2011. Much of these additional profits come from the misery of Mindanao power consumers whose plight could not be helped by government due to restriction on public generation of electricity as Epira restricted the entire sector, including power distribution to private corporations. A prime example of this case is Iligan City.

Iligan City has more than sufficient power plants transferred from IPPs such as those of the Alacantaras to the National Power Corp. which was in turn sequestered by the city government for non-payment of taxes. The two power plants from the Alcantaras are in pristine condition and hardly used by the Alcantara IPP (remember, the oversupply contracted by Fidel Ramos). Due to the excuse Epira ban on government engaging in power sector operations the corrupt public officials of Iligan City found the excuse to resell the IPP turned over by the Alcantaras back to the Alcantaras for a centavo to the peso. The Alcantaras will then generate electricity from their old plant, making a huge killing several times over: from the horrendous overprice during Ramos time to the buyback 20 years later and the new Iligan city power rates that will be three times over 20 years ago.

The Epira law and power privatization have been around for the past 20 years and there has not been anything good to show for it. The promise was cheaper, more reliable and more efficient service, but as the "highest power rate in Asia" one can hardly miss the fact that everything about that promise was false, at the same time the continuing blackouts and brownout, shortage and oversupply situations and the pre-election power crises we just witnessed prior to the recent May 13 elections, testify to the fact that neither reliability nor efficiency has been delivered by the privatization program and the Epira. I will also wager that the newly "elected" top six senators proclaimed without complete canvass returns, will never touch on these all important power rate issues. They wouldn't dare touch the powers that rule over the entire political and financial system, many of who contributed funds to their campaigns.

Faraway, in Eastern Europe, in Bulgaria the power price gouging by privatized power companies brought about by Western liberalization and globalization of the country has caused a major popular rebellion. Six Bulgarians have immolated themselves over the past few months, protesting the out-of-control spiral of cost of living starting with their electricity bills. I have been contemplating not self-immolation but an indefinite hunger strike to force the public to wake up to the power injustice our people are facing, if I can find a dozen to join in the effort I'll take that step. We've struggled over a decade and nothing has worked, maybe it's time for this step. Any joiners?

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