Meralco's 'subsidy' spin

DIE HARD III

Herman Tiu Laurel

8/20/2012

A new survey from a foreign energy consultant ranks Meralco's power rates as the World's "ninth most expensive". The Perth, Australia based International Energy Consultants (IEC) presentation at the Senate's Joint Congressional Power Commission (JCPC) also reported that the Philippines' power rates are still ranked the "highest power rate in Asia". The JCPC is tasked to oversee EPIRA (Electric Power Industry Reform Act) implementation to provide "least cost" power through "competition and efficiency", and chaired by Senator Serge Osmeña (who chastised the conservative economic think tank FEF, Foundation for Economic Freedom, as "communists" for supporting the review of EPIRA). Many Filipinos and Mindanaoans aware of or adept in the power sector issues, like labor advocate Louie Corrales or Mr. Jojo Borja of Iligan Light and Power (ILPI) or consumer advocates Butch Junia or Mang Naro Lualhati, believe Osmeña stonewalls real reforms.

The IEC named Hawaii, Italy, Malta, Japan, Cyprus, Germany, Denmark, Netherlands, Philippines and Singapore as having the highest power rates : "Meralco is comparable with Singapore, Australia, Netherlands and Denmark (the highest in the World - htl) but significantly higher than several other countries within the Asia-Pacific Region ,… In terms of commercial retail tariff, the Philippines ranked sixth among the 44 jurisdictions, with its $0.2043 per kilowatt hour (/kWh), exclusive of value added tax (VAT), 31% above the average among the 44 jurisdictions. The Philippines' $0.1728/kWh industrial retail tariff was also sixth highest and 26% above the average, while its $0.2485/kWh residential retail tariff was 17th highest and 13% above average." Note that Filipino residential consumers are subsidizing the local industrial sector paying 25% higher rates - and subsidizing private power companies who have never fully paid their privatization obligations to this day.

IEC's consultant John Morris said, "Several neighboring countries … have average tariffs that are much lower than Meralco's…due to … subsidies of up to 50% to consumers… IEC believes that providing subsidies via lower tariffs is bad economic practice and ultimately unsustainable. When subsidies are added back to retail tariffs, the true cost of electricity in these countries rises to a level that is much closer to Meralco's… " Mr. Morris' opinion attempts to justify Meralco's high rates, blame it on "subsidy" but on this he provides no basis for the claim. If the policy of subsidizing power is "bad economic practice and ultimately unsustainable" then why are all the Asian countries Morris cites as practicing this "bad subsidy" all growing far faster economically and their people live better lives than the Philippines? Likewise, government subsidy to a country's power sector in its various methods of generation is the predominant practice in the World. This is obvious when considering mega-projects like hydro-electric or nuclear energy project all over the World only governments can undertake.

IEC was also the consultant the Philippine chamber of Commerce and Industry (PCCI) quoted in its February 2011 meeting and reported in the media, the same report TUCP cited to back up its direct and written appeal to President Noynoy Aquino to act on bringing down power costs in the country which it said is causing investors to turn away and jobs lost. Many Filipino power consumer advocates have been reporting this fact even before IEC came out with its survey in October or 2010; but there is a new twist to its presentation of its survey adding its opinion on the matter of subsidies to the power sector that those who understand the power industry in the Philippines immediately recognize as blatant lies: 1) that Philippine and Meralco power rates are among the highest because of subsidy from government and 2) subsidy for electricity is bad of an economy.

Let us state it clearly and emphatically here, there is no government subsidy in the Philippines for its power sector. If any subsidy is being provided it is the power consumers providing it – advancing payments each year for four year regulatory periods to Meralco and other Distribution Utilities (DUs); WESM (Wholesale Electricity Spot Market) exorbitant premium rates for power purchases from selected IPPs (Independent Power Producers); consumers' payments to Meralco rates based on 500% to 900% overprice of transformers, sub-stations, electric poles and other assets, proven by Jojo Borja's documented testimonies; consumer payments to Meralco for the "regulatory liaison" amounting to P 2.2-B which Butch Junia exposes; the carry-on of Meralco non-power related assets such as the Rockwell real estate projects; the up to 17% Performance Based Rate (PBR) that ERC replaced the 12% RORB rate affirmed by the Supreme Court in 2003.

Filipino power consumers are also paying for the subsidies for the "Lifeline Rate" to those consuming below 99kWh/month, the "senior citizens" discount and the SPUG (Small Power Utilities Group) or the financially unviable electrification of rural communities. Government is not paying for any subsidy. Don't be fooled by the use of the term subsidy by Mr. Morris, Serge Osmeña and others like them. They make everyone assume "subsidy" is always from government and "freebee" to people. In the Philippines' privatized power, water and toll ways it is always the consumers and commuters who are paying the subsidy to privatized public enterprises – socialism and "freebees" for the capitalists from the people's capital. IEC is playing an insidious role, as foreign consultants of ERC and Meralco like Emmerton Consulting, SKM and NCL – obfuscating data and signals, mixing half truths, to cover their own asses while taking in huge consultancy fees and giving the ERC, Meralco, the privateers the smokescreen to arbitrarily "true up" or "fudge" information and manipulate the industry sector.

(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. and Sunday, this week: "Politicization of the Judiciary" with Attys. Bono Adaza and Alan Paguia; visit http://newkatipunero.blogspot.com)

Floods: Yellow legacy

DIE HARD III

Herman Tiu Laurel

8/17/2012

The Fourth Yellow government now under BS Aquino III (the first three being under Cory, FVR and Gloria) is pointing to every Juan, Pedro and Maria to blame for the floods.

If we were to listen to Department of Interior and Local Government (DILG) Secretary Jesse Robredo, then it's 100,000 of them, mainly slum folk of Metro Manila, who constitute up to 60 percent of the metropolis' population today. That's easier said than done; not just in the matter of funding for their relocation.
The problem lies in the fact that the cheap labor for the service and industrial sectors of the economy concentrated in Metro Manila comes from the slum-dwellers. Who pick up the thousands of tons of garbage, for example? Who are the waiters in the restaurants; the kargadors in the markets; or the janitors in the supermarkets? But wait: They're not all there is to the slums, as a multitude of the metro's police force also live there. Thus, a major economic dislocation would be in the offing with this knee-jerk reaction of the fourth Yellow government.

The relocation of at least half-a-million impoverished Filipinos from the slums of the metropolis to even worse living conditions for lack of jobs is not necessarily an unwelcome thought for all. If I were with the New People's Army (NPA) and the Communist Party of the Philippines (CPP), probably the only viable force for the poor to hit back at a system that has been so cruel to them, I would quietly watch and not oppose this proposal to "ethnically cleanse" the homeless poor from Metro Manila.

The forced mass migration will count among the largest in human history, one that even Moses probably would not have imagined; and there would be no promised land for such a massive body of humanity taken away from their jobs.
For once, the "reaffirmists" of the CPP-NDF should cozy up to the "rejectionists" of Etta Rosales, Riza Hontiveros, Ronald Llamas, et.al and murmur into their ears, "That's the right thing to do."

The CPP-NDF can finally find a new base, not conforming to Mao's theory — but a base nevertheless — for recruiting and arming freshly angered dissident forces within striking distance of the center of power in this country.

I read one news report quoting Dennis Murphy, whom I got to know as a young activist under Fr. Jose Blanco, lamenting the fact that the poor are always blamed for the floods. Of course, I would also raise the question as to why they are poor and why there are so many of them when the economy is supposedly growing each year and even hitting 6.4 percent in the first quarter of the current one.
This space is too limited to list all the news of the supposed growth or of the astounding corporate profit spikes but I can list a few here: "Energy unit lifts SMC profits …posted a more than 50-percent rise in second quarter net income, driven by earnings from its energy businesses"; "EDC nets P5.7 billion in first half … Lopez-led Energy Development Corp. (EDC) … driven by electricity sales from subsidiaries First Gen Hydro Power Corp. and Green Core Geothermal Inc., which jumped 32 percent to P15 billion from P11.4 billion a year ago."
Whereas we used to get low cost power decades ago, these companies are now components of the highest power cost in Asia inflicted on the Philippine economy, which has resulted in our ever-growing poverty.

The perennial flood crisis facing the entire Filipino nation (not just Metro Manila) is a legacy of the historic counter-revolution in political and economic democracy that was in its nascent stage in the early 1980s and aborted by the Yellow elite-led and US-backed "color revolution."
Whatever the anti-Marcos Yellow forces say against Marcos, it cannot be disputed that his government was already making headway in its housing for the slums and job generation through intermediate industrialization, as well as the launching of the OCW (Overseas Contract Workers) deployment program.

The tenement housing programs in conjunction with the Pag-ibig Fund and other housing financing saw its birth under Marcos. The housing programs since Cory Aquino has been but a shadow of many a derelict Pag-ibig tenement projects.
It's pretty much the same experience the nation has had with the grand and far-seeing flood control programs of Marcos that has seen Cory and the Yellows all but throw these into the untended sewer systems of the country.

The perennial flood disasters will never be solved under the Yellows because they have not a single ideological framework for building the nation. What they do have in their minds is the continuing coddling of the local oligarchy and its foreign overlords; the continuing emaciation of the national economy by accumulating monopoly of its wealth and patrimony; the constant and systematic campaign to push back the Philippines into deeper and deeper social, economic, political, and moral regression until it is completely prostrate before the new, insidious total re-domination of the entire country; and a people completely defenseless and vulnerable to a final dissolution of their nation-state.

Come to think of it, the floods are the least of the disasters that have come from the Yellows. Their ultimate legacy to the future of this nation is the destruction of the nation's hopes — its last vestige of humanity.

(Watch Talk News TV with HTL, Saturdays, 8 to 9 p.m., with replay at 11:15 p.m. and Sundays, on GNN Destiny Cable Channel 8, this week on "Mines: Theirs or Ours?;" visit http://newkatipunan.blogspot.com)

CCT for disaster infrastructure

DIE HARD III

Herman Tiu Laurel

8/13/2012

What the country could build now is a floating grandstand. Then it will be very convenient for BS Aquino III, the other politicians, the DSWD and DILG secretary, the disaster officials, do-goody media networks, ad nausea to perform their center-staging for the national audience. This should be very welcome next year as it is election campaign year. There must be a special rotating stage for BS Aquino and his Cabinet to announce new flood control projects, such as the headline today trumpeting a P352-billion 20-year flood control project. That announcement is clearly intended to cover BS Aquino III's criminally insane move to cancel crucial flood control project such as the Laguna Lake dredging that could have started two years ago and may have mitigated the floods this year. He could also have taken the initiative in reviving the Parañaque floodway project on the plans decades ago but no, he just blabbered on about "tuwid na daan."

To start spending on flood control projects now is just catch up, which speaks of the absolute lack of strategic sense of BS Aquino III and his entire team when they sat down to govern the country two years ago. Without such strategic vision how come they now have this sudden visionary project that will span 20 years or so envisioning such a grand and majestic flood control project costing such as impressive amount. The P352-billion project cost is just a headline and easy announce but what are the details? I can't imagine the Department of Public Works and Highways (DPWH) suddenly conceptualizing and drawing up such a comprehensive plan that would take over 20 years to accomplish — drawn up in the span of a week at the height of the current flood crisis! It is more likely that this headline was frantically designed by Malacañang to parry the growing backlash to its dereliction the past two years of its duty to prepare the nation for these floods. From this perspective, even the aborted chopper flight of BSA III seems like a gimmick.

If the Noynoying administration had more imagination and initiative it could have done a few things early on, like combining its infamously notorious unproductive doleout conditional cash transfer (CCT) program with a work agenda related to flood control project all over the country. A flood control directed work-for-cash program engaged in cleaning up waterways, sewing water floatation jacket stuffed with trashed styrofoam packaging, cleaning sewerage systems, helping dredge canals and clearing Laguna de Bay of water lilies and silt, elevating the levees alongside Marikina, Pasig and other rivers. The CCT beneficiaries could also be engaged in building rafts for flood emergencies by assembling empty oil drums into small floating platforms for flood prone barangays where they reside. The projects could include making tools and equipment from simple auto-jack powered lifting devices, fashioning emergency stretchers, makeshift tents for earthquake crises.

We could think of many more productive projects where the CCT could be used, such as cottage industries making fiberglass safety helmets that can be distributed to schools and public offices for earthquake emergencies. I will bet that the readers of this column can come up with labor intensive projects that can channel the CCT into productive enterprises that can also help provide the basic supplies and equipment for disaster preparedness. Right there in the CCT budget is P35 billion that could already jump start for all types of disaster preparedness. When we give it some thought we see that so much can be done with the budgets already allocated today. In fact, it would be productive and fun to invite readers to send in their ideas on how else the P35-billion CCT can be used productively to provide cash for work that will help in disaster mitigation, flood control and other public effort. We don't need rocket scientists in the Cabinet or the DPWH, just sincere and creative men and women.

A few more ideas: Since the CCT is supposed to be directed toward the welfare of the poor, the urban homeless squatting in the flood stricken areas we see today can be prioritized. They can be assisted with self-help projects to raise their homes on stilts, and we would have new Badjao type homes on stilts that could help resident weather the weeklong floods, and provide a new tourist spot for people to marvel at. If we use the CCT budget every year toward constructing components of those plans of the DPWH engineers for solving the perennial and aggravating flood perils we'd have that P350 billion spent and invested in flood and other disaster mitigation project within 10 years. We don't need to wait until 2035 as the DPWH announced to complete the programs. In only 10 years it would all be done, without allocating additional budgets and employing hundreds of thousands gainfully and taking home enough pay to enroll their children in school and provide sufficient nutrition for the family.

With P35-billion CCT dedicated to creating jobs in flood and disaster preparedness, or other concrete and productive projects all over the country, the environmental and safety awareness level of our people will rise — this pedagogical impact would be incalculable. No doubt, with that kind of budget and the fulfillment generated by the productive income the working poor would certainly gladly donate more floating grandstand every year for the eager do-gooders in society.

(TNT with HTL, Saturdays 8 to 9 p.m., with replay at 11 p.m. and Sundays, on GNN, Destiny Cable Channel 8, this week: "Mines: Theirs or Ours?"; visit http://newkatipunero.blogspot.com)