Salivating for Agus-Pulangi

DIE HARD III

Herman Tiu Laurel

4/2/2012

Jojo Borja, one of the major owners of Iligan Light and Power who is at the forefront of the crusade to expose the anomalies of the power privatization caper, reports that a number of his Mindanao colleagues got wind of broadcast interviews where Serge Osmena called for the privatization of the Agus-Pulangi hydroelectric complex. As such longstanding anomalies are a direct result of the Electric Power Industry Reform Act (Epira), a law that gave rise to the Energy Regulatory Commission (ERC) and Power Sector Assets and Liabilities Management (Psalm) Corp., one of Borja's sources, a Psalm executive, naturally doesn't want to be named.

Mindanao is ultra-sensitive to any suggestion of privatizing its treasure that is the Agus-Pulangi complex. As the people there know that greedy and dirty hands are just waiting to grab this wonder of Mindanao away from them, a mere mention of it would be absolutely revolting.

According to Freedom from Debt Coalition (FDC)'s Wilson Fortaleza, who just came from a National Power Corp. (Napocor) Union-sponsored review of Agus-Pulangi, the hydroelectric plants there (which started operations in 1953) are by now fully depreciated. Thus, the electricity that is produced is less than P0.01 per kilowatt-hour (kWh).

It is easy to understand Mindanao's aversion to privatization. During the past weeks power crisis in Mindanao, some prominent local officials have cited the privatization of Mt. Apo Geothermal to a Lopez company as an issue. Geothermal energy, according to the Center for Energy and Climate Solutions, should only cost anywhere between $0.01 to $0.05/kWh, or from P0.42 to P2.00/kWh on todays exchange rate. But North Cotabato Gov. Emilou Talio-Mendoza and General Santos City Mayor Darlene Antonino-Custodio assert that the private Lopez firm charges a walloping P14/kWh of electricity.

In making his case against government-run power, Senator Osmena said in a March 29 interview that because government tries to lower the price of electricity a president can order power rates to be lowered to become popular. The case of Mt. Apo Geothermal, however, only shows that privatization has resulted in the population being blackmailed with price gouging rates while the oligarchs sit back and watch the regions economy face disaster without concern.

If we go by Osmena's logic, then government must not and should not be concerned about the peoples welfare; government should make only the power oligarchs interests topmost in its priorities; and government need not bother with the welfare of the national economy where industries that have to bear the highest power cost in Asia can no longer compete with other countries.

Mindanao Development Authority (MinDA) chief Lualhati Antonino expressed a deeper suspicion: That the privatized transmission company now called the National Grid Corp. of the Philippines (NGCP) is creating this power crisis to force a privatization of the Agus-Pulangi on the pretext that government has failed.

The likely scenario is that, upon privatization, the Agus-Pulangis less than P0.01/kWh electricity will be sold to Luzon and Visayas for P5.00/kWh when the NGCP lays the submarine cables to link the Mindanao grid back to the islands northward.

Antonino states: I am sorry to say that based on my studies and the researches of my office, I think NGCP is fooling us Where are the power generated by the hydroelectric power generators?... I dont believe it. NGCP is creating an artificial shortage. Niloloko nila tayo (They are fooling us).

International observers today confirm what the Executive Intelligence Review (EIR) reported years ago: Under President Corazon Aquino, no new energy generating capacity was added (and) since the 1993 Ramos emergency measures, the cumulative amount of loot that these forces took out of Napocor (totaled) an estimated $2.5 billion to $4 billion, if not more (As this was estimated years ago, it should now stand at $10 billion.)

To continue, the EIR explains (in its article, The Lessons of California and Brazil) that Companies such as Enron, Reliant Energy bid up the price of electricity on the California Electricity Spot Market (like our own Wholesale Electricity Spot Market or Wesm) (driving) up the average price (by) more than a 1,000 percent. It further states that The Philippines Power Reform Bill replicates all the key destructive features of California.

Malacanang resident Noynoyer, PeNoy Aquino, has not offered any solution to the Mindanaoan's pleas, except that they should expect contracting power barges that would result in higher electricity rates, saying, You will have to share the burden But would the people and consumers of Mindanao share in the profit, too? No way: Thats because in PeNoys world, profits are only for the oligarchs while the entire burden should be for the consumers.

With the Agus-Pulangi still in public hands, all the people are able to share in the bounties flowing from it. If only government ceases to be captive to the oligarchy, the bounties from renewable power in Mindanao and everywhere in the Philippines can be multiplied a hundred fold. But, as our sad experience with the Electric Power Industry Reform Act (Epira) tells us, we, the people, must now wait no longer in junking that privatization law to restore the public sectors control of our countrys economic affairs, particularly electricity generation and distribution. Once this is achieved, government can proceed to prioritize more mini and micro-hydro and geothermal development instead of fossil fuel energy.

We shall end with the latest confirmation of the Philippines highest power cost in Asia from the 2011 comparative survey of the Japan External Trade Organization: Manila at $0.23/kWh; Tokyo and Singapore at $0.20/kWh; Sydney at $0.19/kWh; Colombo at $0.18/kWh; Mumbai at $0.16/kWh; Phnom Penh at $0.15/kWh; Hong Kong at $0.14/kWh; Auckland and Taipei at $0.12/kWh; Kuala Lumpur and Karachi at $0.11/kWh; Shenzhen and Chennai at $0.10/kWh; and Jakarta, Shanghai, Guangzhou, and New Delhi at $0.09/kWh.

The survey also confirms what our colleague Butch Junia has always stressed: That contrary to claims by Osmea of government subsidizing power rates, the reason Philippine commercial/industrial rates are not the highest in Asia yet is that these are subsidized by residential consumers, who, even while consuming only 30 percent of the Manila Electric Co.s distributed electricity, contribute to 67 percent of the power companys income by shouldering incredibly high and lopsided rates. Thats subsidy for you, Serge!

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

Power crisis bound to happen

BACKBENCHER
Rod P. Kapunan
3/31-4/1/2012



The power crisis sweeping Mindanao is not borne out of inept leadership, but one of conspiracy. Maybe President Aquino can fire all his officials headed by Energy Secretary Jose Rene Almendras, but that would not solve the problem of power outage that last daily from four to eight hours. The problem is the result of strong lobby by the country’s top oligarchs to privatize the power plants that still remain in the hands of the National Power Corporation and to make sure all future power plants will firmly remain in their hands.

PNoy’s statement puts truism to the saying of having heard it directly from the horse’s mouth. He said, he would not, at this time, give a go-signal for the construction of the two proposed coal-fired power plants that would have a combined capacity of 300 megawatts. That would take two years to be fully operational. On the other hand, to allow the building of additional power barges would take some time to study the proper rate mix to come up with an acceptable price for the electricity. He said the rate charged by the hydro-electric plants is at P3 per kilowatt hour, while electricity produced from power barges costs P14 per kilowatt hour. It means he would not disturb the existing price cartel for electricity.

Thus, looking at the crisis, one could assume that the shortage is the result of criminal sabotage caused by the impasse between those seeking to privatize the two remaining hydrothermal power plants, the Pulanggi Hydrothermal Power Plant in Bukidnon and the Agus Hydrothermal Power Plant in Iligan, and against those local officials opposed to it. This came to light when North Cotabato Governor Emilou Talino-Mendoza said that the Palace wants Mindanao to submit to its plan to privatize the hydrothermal power plants and to accept power supply from power barges. Among these power oligarchs aching to capture an already captured market are the Lopezes, Ayalas, Aboitizes, and the newcomer, shopping mall tycoon Henry Sy. The chairman of the Mindanao Business Councils Ramon Loresta is opposed to the privatization of the Agus Hydrothermal Plant in Lanao for when Mt. Apo Geothermal Plant was sold to the Lopezes, they immediately raised by 70 percent their power rates for which they are now paying more than P8 per kilowatt hour.

What complicated the issue is the statement of the chairman of the Committee on Energy, Senator Sergio Osmeña. He said, such anomalous practice of imposing “political rates” or one dictated by the government is often the result of populist pressures. Senator Osmeña said, “It was Mrs. Arroyo who ordered the state-owned Napocor to sell its power below the cost of production just to boost her sagging image.” Such a statement only exposes his ignorance because even if “political rates” resulted in losses, it being a form of subsidy that could not result in power shortage notwithstanding the private power suppliers are not obligated to join the price ceiling set by the government. Rather, the fear is it could reduce their profit for the unused power they produce under that onerous power purchase agreement entered into by Ramos although now given a new name.

Moreover, Osmeña’s ranting of private competition as decisive to bring down the prices of electricity makes no sense because that did not result in the lower cost of electricity. Our electricity is considered the highest in Asia today. He knows there could never be a fair competition because the power industry stands as a cartel or an exclusive club made up of handful of demigods. The cartel exists in the fixing of price, in the supply of electricity, and the contract always made in their favor. In effect, competition is a sham.

Besides, before the government decided to cut Napocor into pieces, profit only came from two main sources, profit earned by Napocor for operating those power plants, and profit earned by the distribution utilities. In their bid to destroy the monopsony which we followed for years, each specialized sector in the industry now has to curve out a way to earn, and they come with an array of charges, often not understood by the consumers. The power plant operators first make their killing, followed by the transmission line franchise holders, and finally by the private utility distributors, and each is entitled to create their own charges to justify their hold up rates.

When those morons in government further decided to trade power supply on the wholesale spot market, they thought it would also result in the reduction in the cost of electricity. Not one bothered to think that whether the traders would sell the commodity at a loss, they would never allow themselves to end up without a commission. It is their profit that removes the cost of electricity from what we call “net cost.” This is why the public is asking Osmeña just how competition will help roll back the price of electricity when essentially the duty of the traders is to jack up the price? Otherwise, a consistently low price could cost the trader his job. If at times, the cost of power in the spot market is low, it has nothing to do with cost, but by the low demand for power, and in that instance they are forced to reduce their price resulting in lower profit, but never at a loss.

For all of Osmeña’s wild punch, he failed to analyze that the government can forego profit because that loss in the long run could generate more production, and residually, more employment for our people. The subsidy is thereby recovered by additional revenues that may proliferate because of the low cost in power supply. Osmeña failed to decipher this because his allegiance is to the private operators, specifically to the Lopez family of which he is related by affinity.

(rodkap@yahoo.com.ph)

Serge’s Epira contradictions

DIE HARD III
Herman Tiu Laurel
3/30/2012



The electricity spaghetti hit the ceiling fan last week, and the stench of the power oligarchs reeks all over the place. Now it’s not just electricity consumers charging the oligarchs and their captive government officials with conspiracy; local officials, such as North Cotabato Gov. Emilou Taliño-Mendoza and General Santos City Mayor Darlene Antonino-Custodio, are saying that the Mindanao power crisis is “intentional.” Even Sen. Koko Pimentel openly agrees with Mindanao Development Authority (MinDA) Chairman Lualhati Antonino’s assertion that the “artificial shortage” is the National Grid Corp. of the Philippines’ (NGCP) means to “have the Agus-Pulangi Power Plant privatized.”

The NGCP is by no means the main culprit. It goes way up to the oligarchy and the international corporatist mafia behind it. We must remember that the NGCP Frankenstein was sewn together by Fidel Ramos’ Monte Oro Corp., with the Carlyle Group catalyzing the entry of the State Grid Corp. of China, together with the Sy Group, to become the NGCP.

Monstrous as it became, the NGCP Frankenstein is but the son. The mother Frankenstein is the Electric Power Industry Reform Act (Epira), which, in its time, was sewn together by the International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), the illegal Gloria Arroyo regime, the oligarchs and their Yellow “civil society,” together with the corrupt 12th Congress of Edsa II. They managed to use the thread of the ADB’s $900-million power sector loan and the IMF-WB’s $300-million rehabilitation loan release as conditions for the enactment of the Epira into law.

The local power oligarchs were also alleged to have contributed to a payola of P500,000 for every member of Congress under Speaker Sonny Belmonte, which emoluments were further spruced up by Gloria’s P10-million per congressman “O, Ilaw” project. And, like the current railroaded Corona “Articles of Impeachment,” it is doubtful that even half-a-dozen of the representatives or senators who signed the Epira even read it.

As for media, the oligarch-controlled “presstitute” (press-prostitute) merely suppressed the truth. Only a few, like this columnist and the Freedom from Debt Coalition (FDC), campaigned in the streets against it.

The argument for Epira was that the monopoly enjoyed by the government’s National Power Corp. (Napocor) was too big to be efficient and had to be broken up into smaller units. Fast forward to today and the chairman of the Senate energy committee, Serge Osmeña, himself a champion of the Epira, now argues for the expansion of the split-up units.

In his defense of Department of Energy (DoE) Secretary Rene Almendras’ disastrous handling of the Mindanao power crisis, Osmeña claims the Energy chief “is aware of economies of scale and that electricity would be cheaper for everyone if distributed over a bigger transmission grid than a smaller one…”

The shift in tone is obviously because much of the elite — a class to which Osmeña belongs — 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.”

Osmeña says, “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…” Really?

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. Here, securitization comes in “the form of financial instruments used to obtain funds from… investors… backed by amortizing cash flows.” These cash flows, in turn, are derived from the pockets of millions of electricity consumers.

Historically, 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, we can say that the power sector was never (repeat, NEVER) subsidized.

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

In the case of Mindanao, we now 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 wait. Isn’t price a reflection of these privateers’ much-vaunted “efficiency?” If so, aren’t they and other utilities like the Manila Electric Co. (Meralco) guilty of doing their jobs at a very high cost to the nation and, in fact, destroying its entire economy?

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

As if to further cover up the litany of lies that is the Epira, Osmeña raises another point, saying that “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 and viable public corporation before Corazon 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). All these led to a “Dark Age” under a Cory-appointed oligarch as Napocor head. What followed during the Ramos era were 43 more plundering IPP contracts that were to be the most massive bloodletting of Napocor’s resources to this day — via the $18-billion so-called stranded debts that Epira was supposed to have erased but never did. All these have transpired while the oligarchs have not paid $10 billion of what they owe government for these privatized assets.

The current 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.” Let’s see when the investigation will start and how far it will go (considering who the distribution source of the Epira payola in 2001 really is).

Still, on a slightly positive note, despite the elder Sen. Nene Pimentel’s signing of the Epira, we are hopeful that the younger Pimentel will take up the energy cause in the Upper Chamber this time. My only criticism is that he may have weakened his position when he stated, “If I need to personally beg to Senator Osmeña to hold the inquiry before the Holy Week break, I will have to.”

Why even beg, Koko? Your duty lies with the people and no one else.

(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., after Lent, on “Mindanao power blackmail? Part II;” visit http://newkatipunero.blogspot.com for our articles plus TV and radio archives)