DIE HARD III
Herman Tiu Laurel
11/22/2010
For the past weeks, we have focused on the skyrocketing rate increases and leapfrogging net incomes of power companies. We highlighted Meralco’s 60-percent jump in profits from September last year of P7 billion to its target of P11 billion this year, which it even projects to surpass.
A week later, we zeroed in on Aboitiz Equity Venture’s 187-percent surge in net income to P16.8 billion, of which 80 percent came from its power generation ventures. This included the two power barges it bought at a huge bargain from the National Power Corp. (Napocor), which were later overpriced for Mindanao’s use and set as the basis for the island group’s new exorbitant electricity rates.
Last week, we highlighted the Wholesale Electricity Spot Market (Wesm)’s petition for a rate increase for the “commodity” being auctioned through its trading floor to the power distribution networks; upon which we concluded that the profiteering “…just goes on and on, keeping our power rates the highest ever in Asia.
And yet, this week brought us a new shock report: the Lopez-owned First Gen Corp. reported a net income of $66.5 million (P2.8 billion), or P301 million in just nine months. First Gen said that its unit, Energy Development Corp. (EDC) — the Napocor geothermal company privatized under the tenure of Gloria Arroyo-appointed president Paul Aquino who then joined the privatized EDC as CEO (so much for the ethics of the Aquinos) — generated the gargantuan increase in its profits. According to First Gen president Giles Puno, “…earnings growth was delivered by EDC coming mainly from the increased contribution of the plants that it acquired last year. We are fortunate that these developments are aided by the positive sentiment and growth in our economy today.”
So, a national patrimony such as EDC, which gave us very cheap electricity, is privatized so that prices can be jacked up just to profit one family’s firm. The profit swell for the four privatized power operations here brings the additional burden on the Filipino power consumers from Luzon to Mindanao to at least P28.766 billion; and these are just four of several dozens upon dozens of privatized power companies we have counted.
This added burden to consumers would not have been there if privatization had never been inflicted on us. This is P28.766 billion less money for Filipinos who would otherwise have spent it on other needs and consumables — from food to medical care, to education and entertainment, to clothes and transportation costs, to more visits to the malls and trips to provincial relations, or a trip to the beaches to spread a little more money to the rural areas.
Privatization of power is not just sucking us dry, it is sucking us dead. How do we fight back? Let’s organize into “Light Brigades” to promote the struggle, starting with the “Lights Out” campaign to continue disseminating information.
Still, after this constant focus on the matter of our debilitating power costs, a moment of comic relief did come along. It started when a wayward cellphone rang inside the session hall of the Senate, which triggered the harangue of Miriam Defensor Santiago on the “lightweights” in Malacañang, or around what Linggoy Alcuaz calls the “happy hour kitchen Cabinet.”
Santiago does have good reason to pick up her lance and charge at the lightweights, particularly Secretary Armin Luistro, who is nothing but a factotum of the Catholic hierarchy and naturally expected to execute the agenda of the Catholic Church in a government that is supposed to be separate from any religious bias. Luistro was a key element in the mobilization against the duly-elected government of President Estrada; clearly, this Luistro is not a trustworthy individual to function for a secular, democratic state.
The only problem with Miriam’s assault on the “lightweight” brigade of the Palace is that she can also be charged for the same thing. One can only imagine what Santiago faced at that moment, paraphrasing from Tennyson, “Cellphone rings to the left of her, cellphone rings to the right of her; volleyed and thundered, stormed up with shot and shell” and so she had to sally forth too. Most of the three hundred or so of our legislators today can also be included in this category, which explains why this country continues down the crazy path of deterioration.
Neither the legislature nor Malacañang has done anything to alleviate the dire plight of the nation’s residential and industrial power consumers, making millions upon millions of us suffer along with the national economy from the highest power costs in Asia, if not the world.
Fortunately, there are hopeful signs in Congress that some individual legislators are standing up to be on the truly courageous “Light Brigade” that brings to light the prevarications of state regulatory agencies. One of them, a guest in our last GNN program, Rep. Bernadette “BH” Herrera, is standing up to the oligarchs’ predatory manipulation of water and power rates. She is ably joined by the amiable congressman from Navotas-Malabon, Toby Tiangco, who will also guest with us next. Of course, there’s our own “Light Brigade” that meets every Saturday and farms out everyday to keep the struggle going. So let us all charge forth with the light that will obliterate the power pirates’ darkness!
(Tune in to Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; watch Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable, now Channel 8; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
Monday, November 22, 2010
Friday, November 19, 2010
Double standard privatization
DIE HARD III
Herman Tiu Laurel
11/19/2010
Given the many issues that are basic to the well-being of the Filipino people such as electricity, water, public transport and toll ways that are not being dealt with by most columnists of mainstream media, I have made it a point to focus on them through this space. But whenever I see issues covered extensively by media being obfuscated by writers who rear their discriminatory heads, then I have to step into the fray.
The Philippine Airlines (PAL) vs PAL Employees Association (Palea) strike threat is a case in point. One the chief proponents of the privatization of state assets, economic liberalization advocate Solita Monsod, takes what I see as a double standard stand on the PAL vs Palea impasse, as she uses it as another opportunity for lambasting a favorite whipping boy of the Makati Business Club, a noisy group that shares her economic views.
That the global and local airline industry is going through precarious times is not in doubt. Monsod concedes that “the global economic crisis was in full flow in 2008 and 2009, and travel was a natural victim (with)… a 7 percent decrease in worldwide demand.” She also admits the adverse impact of new restrictions on the Philippine aviation industry by the US Federal Aviation Administration (FAA) and the International Civil Aviation Organization (ICAO) after our country was downgraded due to deficiencies in our Air Transportation Office (ATO) and the Civil Aviation Authority of the Philippines (CAAP).
What is not included, though, in that litany of problems besetting PAL is the flag carrier’s history of overstaffing before privatization, which previous management reorganizations constricted by government-led compromises could not optimally resolve. What PAL wouldn’t give to get the chance that other airlines such as Cebu Pacific had, which is to start from scratch — to start on the right foot.
One setback of PAL in the past three years came from losses on its hedge against aviation fuel price spikes in 2008. PAL reportedly incurred $150 to $300 million in losses when oil prices reversed and dove instead, as the global economic downturn took its toll.
Monsod and Palea keep attributing this loss only to management and says labor shouldn’t be punished for it. I don’t think PAL ever intended to take out that loss on anyone, but that hedge was a judgment call intended for the good of the company as a whole.
Fuel is obviously a fundamental cost in any airline operation. Securing oneself against fuel price spikes, which many expected at that time, was to PAL’s interest. A case can be made that fuel prices really could have gone right through the roof. If it had gone that way, all stakeholders in PAL — management, labor, and even government — would have reaped the benefit from the hedge.
Privatization was intended to pass management of the flag carrier from cumbersome state managers to private, professional managers. I have never been for privatization of state and public utility assets. I have fought it all the past decades; but the advocates of privatization should be consistent and leave private management’s prerogative alone so long as laws are strictly followed.
PAL’s spinoff of various non-core operations comes from a tenet of good business — focus. There is clearly nothing illegal in that spinoff, and the company is complying with its obligation to provide severance pay (increased to 1.25 month for every year of service), and offers new opportunities in the new spun-off companies to retrenched employees which would most likely lead to better future compensation as the companies grow with the synergy.
Those who expect the privatized company to perform like a social welfare enterprise could propose to start getting the state and government involved again. Do what the Japanese did to save their Japan Airlines (JAL). Their government pumped in 50 billion yen to turn it around, which was justified in JAL’s case as it is a government airline.
Detractors claim that the new spinoff companies are also invariably led by one relation or another of the PAL owners, but who best to invite new capital into this unattractive industry today than those who can assure new investors the good will with the core client?
PAL’s owners have actually unburdened government of a huge weight around its neck, and PAL’s privatization is the only privatization project where the public is ahead; unlike the privatization in power, water, toll ways, mass transit system and port handling. It’s a wonder why Monsod practically never critiques these other privatizations.
The recent bus transport strike in Metro Manila highlights another double standard: The Metropolitan Manila Development Authority (MMDA) and the Department of Transportation and Communications’ view of buses as traffic jam generators, while being blind to the over a hundred thousand private cars exclusively chauffeuring students to and from school, clogging up Edsa and its tributaries.
Buses serve five times more passengers per square meter than private vehicles, having much greater positive economic and social value. Private vehicles are inefficient commuter movers; only more “sosyal.” School buses should be mandatory in Metro Manila, where a special school bus network with communication radios and trained conductors that would unclog Metro roads by over a hundred thousand cars should be established. When I proposed this to Cory Aquino’s MMDA chief Elfren Cruz in 1991, he said: “Magagalit ang mayayaman.” (The rich will get angry.)
Frankly, this crackdown on buses may have a hidden agenda — make the MRT’s new coaches (and resulting higher rates) under the multi-million public-private partnership or PPP projects more lucrative for PeNoy’s invited “investors.”
(Tune in to Sulo ng Pilipino, Monday, Wednesday and Friday, 6 to 7 p.m. on 1098AM; watch Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable, now Channel 8; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
Herman Tiu Laurel
11/19/2010
Given the many issues that are basic to the well-being of the Filipino people such as electricity, water, public transport and toll ways that are not being dealt with by most columnists of mainstream media, I have made it a point to focus on them through this space. But whenever I see issues covered extensively by media being obfuscated by writers who rear their discriminatory heads, then I have to step into the fray.
The Philippine Airlines (PAL) vs PAL Employees Association (Palea) strike threat is a case in point. One the chief proponents of the privatization of state assets, economic liberalization advocate Solita Monsod, takes what I see as a double standard stand on the PAL vs Palea impasse, as she uses it as another opportunity for lambasting a favorite whipping boy of the Makati Business Club, a noisy group that shares her economic views.
That the global and local airline industry is going through precarious times is not in doubt. Monsod concedes that “the global economic crisis was in full flow in 2008 and 2009, and travel was a natural victim (with)… a 7 percent decrease in worldwide demand.” She also admits the adverse impact of new restrictions on the Philippine aviation industry by the US Federal Aviation Administration (FAA) and the International Civil Aviation Organization (ICAO) after our country was downgraded due to deficiencies in our Air Transportation Office (ATO) and the Civil Aviation Authority of the Philippines (CAAP).
What is not included, though, in that litany of problems besetting PAL is the flag carrier’s history of overstaffing before privatization, which previous management reorganizations constricted by government-led compromises could not optimally resolve. What PAL wouldn’t give to get the chance that other airlines such as Cebu Pacific had, which is to start from scratch — to start on the right foot.
One setback of PAL in the past three years came from losses on its hedge against aviation fuel price spikes in 2008. PAL reportedly incurred $150 to $300 million in losses when oil prices reversed and dove instead, as the global economic downturn took its toll.
Monsod and Palea keep attributing this loss only to management and says labor shouldn’t be punished for it. I don’t think PAL ever intended to take out that loss on anyone, but that hedge was a judgment call intended for the good of the company as a whole.
Fuel is obviously a fundamental cost in any airline operation. Securing oneself against fuel price spikes, which many expected at that time, was to PAL’s interest. A case can be made that fuel prices really could have gone right through the roof. If it had gone that way, all stakeholders in PAL — management, labor, and even government — would have reaped the benefit from the hedge.
Privatization was intended to pass management of the flag carrier from cumbersome state managers to private, professional managers. I have never been for privatization of state and public utility assets. I have fought it all the past decades; but the advocates of privatization should be consistent and leave private management’s prerogative alone so long as laws are strictly followed.
PAL’s spinoff of various non-core operations comes from a tenet of good business — focus. There is clearly nothing illegal in that spinoff, and the company is complying with its obligation to provide severance pay (increased to 1.25 month for every year of service), and offers new opportunities in the new spun-off companies to retrenched employees which would most likely lead to better future compensation as the companies grow with the synergy.
Those who expect the privatized company to perform like a social welfare enterprise could propose to start getting the state and government involved again. Do what the Japanese did to save their Japan Airlines (JAL). Their government pumped in 50 billion yen to turn it around, which was justified in JAL’s case as it is a government airline.
Detractors claim that the new spinoff companies are also invariably led by one relation or another of the PAL owners, but who best to invite new capital into this unattractive industry today than those who can assure new investors the good will with the core client?
PAL’s owners have actually unburdened government of a huge weight around its neck, and PAL’s privatization is the only privatization project where the public is ahead; unlike the privatization in power, water, toll ways, mass transit system and port handling. It’s a wonder why Monsod practically never critiques these other privatizations.
The recent bus transport strike in Metro Manila highlights another double standard: The Metropolitan Manila Development Authority (MMDA) and the Department of Transportation and Communications’ view of buses as traffic jam generators, while being blind to the over a hundred thousand private cars exclusively chauffeuring students to and from school, clogging up Edsa and its tributaries.
Buses serve five times more passengers per square meter than private vehicles, having much greater positive economic and social value. Private vehicles are inefficient commuter movers; only more “sosyal.” School buses should be mandatory in Metro Manila, where a special school bus network with communication radios and trained conductors that would unclog Metro roads by over a hundred thousand cars should be established. When I proposed this to Cory Aquino’s MMDA chief Elfren Cruz in 1991, he said: “Magagalit ang mayayaman.” (The rich will get angry.)
Frankly, this crackdown on buses may have a hidden agenda — make the MRT’s new coaches (and resulting higher rates) under the multi-million public-private partnership or PPP projects more lucrative for PeNoy’s invited “investors.”
(Tune in to Sulo ng Pilipino, Monday, Wednesday and Friday, 6 to 7 p.m. on 1098AM; watch Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on Global News Network, Destiny Cable, now Channel 8; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
Monday, November 15, 2010
A growing movement
DIE HARD III
Herman Tiu Laurel
11/15/2010
Even as those photo ops between Clinton and PeNoy hit the newsstands, in aid of the massive PR spin on the US ’ support for its little puppet amid its dwindling influence in this part of the world, the conditions for creating an explosion of awareness on the true crisis in Filipinos’ lives are multiplying.
Most importantly, the middle class is now getting more and more energized in our fight against the blatant (and unprecedented) political and economic abuses in the privatized electricity, water, and infrastructure utilities of this nation.
One indication of this growing involvement is the flurry of Internet exchanges on power issues. An example is Edna’s (surname withheld) e-mail to Pete Ilagan of Nasecore (National Association of Electricity Consumers for Reforms, an anti-power plunder consumer group):
“Pete, you might want to check if ERC is actually adjusting the economic indices used in the calculation of the ARR of Meralco and other DUs under the PBR. These are the (a) Peso-US$ exchange rate, (b) Philippine CPI, and (c) US CPI. ERC is supposed to adjust them yearly.
“I am attaching a table that I made showing the forecast indices vs the actual. Note that for the Peso-US$ exchange rate, the forecasts are higher than the actual. For the US CPI, except for one year where actual was higher, the ERC forecasts were also higher than actual. If they’re not corrected, they will increase Meralco’s profit because these indices, especially the exchange rate and US CPI, are used to calculate the capex and depreciation costs, the major components of the rate base and ARR.”
If the indices used by the Energy Regulatory Commission (ERC) are regularly higher than the actual, then it is to be expected that it will always grant its approval to higher rates for the power generation, transmission and distribution firms that petition without fail for rate increases.
Since the ERC is invariably either derelict or in collusion with those petitioners, the public will never see the light on these outrageous distortions. Citizens and consumer groups hardly have any funds, but are fueled by their indignation over this naked manipulation, abuse, and exploitation by the utility regulatory agencies in the power sector, aside from the MWSS, LWUA and the Toll Regulatory Commission in others.
Citizens themselves are funding the necessary expenses, such as lawyers’ appearances at the ERC and in the courts. One donor is a former city mayor in Metro Manila who does not want to be named.
The latest initiative is beginning to bring together a renewed focus for the different crusaders, such as EmPower, Freedom from Debt Coalition (FDC), and Kaakbay, which have been at it since the start of the decade. FDC and EmPower have signified agreement to revive their own “lights out” call (switching off lights at some appointed time of the week), which were highly successful in select communities that involved hundreds of thousands of families. Even as other issues have sidetracked their campaigns, they are more than ready to reconnect with the broader effort this time around.
In December, the FDC is spearheading a nationwide summit on this crusade to be held in Baguio, as I was told by Job Bordamonte of FDC during our discussion on my TV program. I’m very excited about this and this column aims to start disseminating the information. There have been ebbs and flows in the struggle but a crescendo is building again.
Still, I got an indication of the attitude of the masses to this problem of exorbitant electricity costs. One of my former media staff, Glecy, whom I was with when she was asked about her community’s take on this issue, said, “Wala naman kaming magagawa.” (We can’t do anything about it.)
This sense of helplessness and hopelessness is what the oligarchs and their media are banking on as they continue to instill this into the masses’ subconscious through progressive impoverishment, fascist suppression of past protests (joined in by the masa), media blackout of power news through entertainment distraction, plus ERC connivance to frustrate every legitimate effort to thwart the abuse by the power oligarchs.
The critical situation prevails from RP’s north to south, and this column has tried to reflect it all. As of this writing, news of four-hour blackouts in the Visayas.
I was informed that in the Negros islands and towns such as Sipalay, four-hour power outages have become prevalent. In Mindanao, our decade-long crusader there is under threat of assassination. Yes, he fears for his life there for the exposés he has made on the IPPs’ (independent power producers) many abuses; and for this reason he has been reluctant to take a high profile in media on the issue.
I have been telling his friends that his security can only be assured when he comes out fighting a total war — including becoming an anti-power plunder celebrity. I hope he takes my advice as we are ready to help him all the way. The good thing is that he has been linking with us in the Metro Manila networks. As I said, the movement is growing again — so the masa need not feel helpless anymore. Remember: “Lights Out Mondays,” 7 to 7:10 p.m.
(Tune in to Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; watch Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on “Power Consumers’ Legislative Champions: Reps. Bernadette Herrera and Toby Tiangco,” on Global News Network, Destiny Cable Channel 21; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
Herman Tiu Laurel
11/15/2010
Even as those photo ops between Clinton and PeNoy hit the newsstands, in aid of the massive PR spin on the US ’ support for its little puppet amid its dwindling influence in this part of the world, the conditions for creating an explosion of awareness on the true crisis in Filipinos’ lives are multiplying.
Most importantly, the middle class is now getting more and more energized in our fight against the blatant (and unprecedented) political and economic abuses in the privatized electricity, water, and infrastructure utilities of this nation.
One indication of this growing involvement is the flurry of Internet exchanges on power issues. An example is Edna’s (surname withheld) e-mail to Pete Ilagan of Nasecore (National Association of Electricity Consumers for Reforms, an anti-power plunder consumer group):
“Pete, you might want to check if ERC is actually adjusting the economic indices used in the calculation of the ARR of Meralco and other DUs under the PBR. These are the (a) Peso-US$ exchange rate, (b) Philippine CPI, and (c) US CPI. ERC is supposed to adjust them yearly.
“I am attaching a table that I made showing the forecast indices vs the actual. Note that for the Peso-US$ exchange rate, the forecasts are higher than the actual. For the US CPI, except for one year where actual was higher, the ERC forecasts were also higher than actual. If they’re not corrected, they will increase Meralco’s profit because these indices, especially the exchange rate and US CPI, are used to calculate the capex and depreciation costs, the major components of the rate base and ARR.”
If the indices used by the Energy Regulatory Commission (ERC) are regularly higher than the actual, then it is to be expected that it will always grant its approval to higher rates for the power generation, transmission and distribution firms that petition without fail for rate increases.
Since the ERC is invariably either derelict or in collusion with those petitioners, the public will never see the light on these outrageous distortions. Citizens and consumer groups hardly have any funds, but are fueled by their indignation over this naked manipulation, abuse, and exploitation by the utility regulatory agencies in the power sector, aside from the MWSS, LWUA and the Toll Regulatory Commission in others.
Citizens themselves are funding the necessary expenses, such as lawyers’ appearances at the ERC and in the courts. One donor is a former city mayor in Metro Manila who does not want to be named.
The latest initiative is beginning to bring together a renewed focus for the different crusaders, such as EmPower, Freedom from Debt Coalition (FDC), and Kaakbay, which have been at it since the start of the decade. FDC and EmPower have signified agreement to revive their own “lights out” call (switching off lights at some appointed time of the week), which were highly successful in select communities that involved hundreds of thousands of families. Even as other issues have sidetracked their campaigns, they are more than ready to reconnect with the broader effort this time around.
In December, the FDC is spearheading a nationwide summit on this crusade to be held in Baguio, as I was told by Job Bordamonte of FDC during our discussion on my TV program. I’m very excited about this and this column aims to start disseminating the information. There have been ebbs and flows in the struggle but a crescendo is building again.
Still, I got an indication of the attitude of the masses to this problem of exorbitant electricity costs. One of my former media staff, Glecy, whom I was with when she was asked about her community’s take on this issue, said, “Wala naman kaming magagawa.” (We can’t do anything about it.)
This sense of helplessness and hopelessness is what the oligarchs and their media are banking on as they continue to instill this into the masses’ subconscious through progressive impoverishment, fascist suppression of past protests (joined in by the masa), media blackout of power news through entertainment distraction, plus ERC connivance to frustrate every legitimate effort to thwart the abuse by the power oligarchs.
The critical situation prevails from RP’s north to south, and this column has tried to reflect it all. As of this writing, news of four-hour blackouts in the Visayas.
I was informed that in the Negros islands and towns such as Sipalay, four-hour power outages have become prevalent. In Mindanao, our decade-long crusader there is under threat of assassination. Yes, he fears for his life there for the exposés he has made on the IPPs’ (independent power producers) many abuses; and for this reason he has been reluctant to take a high profile in media on the issue.
I have been telling his friends that his security can only be assured when he comes out fighting a total war — including becoming an anti-power plunder celebrity. I hope he takes my advice as we are ready to help him all the way. The good thing is that he has been linking with us in the Metro Manila networks. As I said, the movement is growing again — so the masa need not feel helpless anymore. Remember: “Lights Out Mondays,” 7 to 7:10 p.m.
(Tune in to Sulo ng Pilipino, Monday, Wednesday, and Friday, 6 to 7 p.m. on 1098AM; watch Politics Today with HTL, Tuesday, 8 to 9 p.m., with replay at 11 p.m., on “Power Consumers’ Legislative Champions: Reps. Bernadette Herrera and Toby Tiangco,” on Global News Network, Destiny Cable Channel 21; visit our blogs, http://newkatipunero.blogspot.com and http://hermantiulaurel.blogspot.com)
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