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GMANews.TV
29 April 2008
http://www.gmanews.tv/story/92257/ADB-told-to-stop-pushing-for-privatization-of-RPs-food-power-sectors
04/29/2008 | 05:15 PM
MANILA, Philippines – The Asian Development Bank (ADB) should stop pushing for and profiteering from the privatization of the Philippines’ energy and grain sectors amid the skyrocketing prices of rice and electricity, civil society groups said in a statement.
The Philippine Working Group on the ADB, which engages the bank on various issues, made this call one week before the bank holds its 41st Annual Meeting of the Board of Governors in Madrid, Spain, on May 3 to 6, 2008.
According to Milo Tanchuling, secretary-general of the Freedom from Debt Coalition (FDC), the multilateral lender should seriously reconsider its strategy of pushing for the participation of the private sector in the power industry.
“Today’s problems come from yesterday’s solutions. Our problem on the rising electricity rates today is a result of the ADB’s private sector participation strategy,” said Tanchuling, referring to the Masinloc coal-fired power plant.
‘ADB acted like a commercial bank in Masinloc sale’
Tanchuling explained that the Philippine government incurred $687 million worth of loans when it agreed to allow ADB to bankroll the construction of the Masinloc coal-fired power plant in the mid-1990s.
But in 2001, the Bank also helped fund the enactment of the Electric Power Industry Restructuring Act (EPIRA), which pushed for the privatization of the state-owned power plants.
With the law already enacted, the government later attempted to sell Masinloc which earlier failed because of a lack of power agreements with distribution utilities and big-ticket users.
“The sale only consummated recently after the AES Corp. acquired the 660-MW plant in Masinloc, Zambales, at $930 million, with the help of the National Power Corporation securing 265-MW PPAs for the new owner and with the $200-million loan from ADB,” Tanchuling said.
Earlier, the ADB announced that AES Corp. also raised $400 million from equity investments and subordinated loans, $35 million from a loan from the International Finance Corp. (IFC) and $295 million from loans from the IFC and four commercial banks. The AES Corp. has already paid the government in full last April 16.
“Where do you think this new Masinloc owner will get its return of investment? Obviously, from us, the consumers,” said Tanchuling. “And the ADB is allowing that because it is acting like a commercial bank, a great profiteer. It has profited a lot, in terms of repayments, from construction of the power plant to restructuring of the industry to privatization of Masinloc.”
Energy industry privatization will not make rates affordable for the poor
In reality, the so-called power sector reforms or privatization program being peddled by the ADB is not about providing access to all, especially the poor. Nor it is about making power rates more affordable for the poor, the statement added.
“In fact, the recent increase in electricity charges is because of the more expensive power bought through the wholesale electricity spot market (WESM) which is the heart of the privatization and restructuring program financed by the ADB. A separate funding for this was provided by the ADB which profits again from this in the process. With so much investments on this, the consumers still end up paying high electricity rates, now among the highest in the world,” Maris dela Cruz of EmPOWER Consumers said.
Furthermore, FDC’s Tanchuling said that the power sector receives the largest sector loan in ADB’s portfolio, from financing the energy sources development in the 1970’s to early 1980’s, power crisis management in 1980’s to early 1990’s, up to electric power sector restructuring from mid-1990’s to present.
Private sector participation was first introduced in the 80’s and intensified in the 90’s, primarily to address the lack of government capital to finance the rehabilitation and construction of new power plants in the country to address the power crisis.
In the 21st century, the Bank wants full private sector participation—not just in management, operation, but full ownership of the utilities to free up government resources for this sector and use it instead for other services. This was the aim of the EPIRA whose passage in 2001 was facilitated by the $300-million loan from ADB.
ADB ‘guilty of compromising food security’
For her part, Alice Raymundo of the Task Force Food Sovereignty (TFFS) said the ADB is “guilty of compromising food security” not only in the Philippines, but also in some parts of Asia.
TFFS criticized the bank for its loan conditionalities that forced governments to deregulate and turn over agriculture to the private sector, citing the case of the Philippines and many other Asian member countries which are currently threatened with rice shortage.
Despite being among the world’s top rice producers, the Philippines remains a net importer of the staple. It was rice sufficient up to the early 80s but lost control and relied on importation since the early 90s. Current RP rice production can only cover for 80 per cent of the country’s needs.
“The ADB must be held accountable to the growing food insecurity in developing countries. Since its founding in 1967, the Bank had financed countless agricultural projects, but weakened farmers and communities instead of strengthening them. ADB supported the commodification of rice, application of market mechanisms and the price system in agriculture, liberalization and opening of trade,” Raymundo said.
‘Bank forces nations to adopt anti-farmer, fisher policies’
“ADB projects like the Grain Sector Development Program (GSDP) in the Philippines and the Khulna-Jessore Drainage Rehabilitation Project in Bangladesh have been given with many policy conditionalities, including the removal of quantitative restrictions and lowering of tariffs of agricultural products. ADB conditionalities force countries to adopt policies that are harmful, especially those in the margins, farmers and fishers included,” Raymundo said.
“Many of the Bank’s projects are controversial and are considered “onerous” because other than its anti-poor conditionalities, the projects have destroyed lives. The Khulna-Jessore Drainage in Bangladesh now caused prolonged flooding in surrounding communities, causing families to lose livelihoods and wallow in poverty.
The Philippines’ Grain Sector Development Program barely took off, and was cancelled after $100 million had been taken by government. In both instances, the supposed benefits are non-existent, and beneficiaries continue to suffer. The absurdity of it all is that the ADB will collect on these debts, no matter what,” explained Raymundo. – GMANews.TV
Civil society to ADB: Stop pushing privatization program and profiteering from it
PRESS RELEASE
Philippine Working Group on the ADB
Contact persons:
Milo Tanchuling, Freedom from Debt Coalition (FDC) secretary general, @ 0920-9018711
Maris dela Cruz, EmPower Consumers secretariat, @ 0920-8471755
Alice Raymundo, Task Force Food Sovereignty (TFFS) secretariat,@ 0922- 8065536
Bobby Diciembre, FDC media campaigner, @ 0920-9059856
FOR IMMEDIATE RELEASE
29 April 2008
MANILA, Philippines—The Asian Development Bank should stop pushing for and profiteering from the privatization of the energy and grain sectors in the country amid the skyrocketing prices of rice and electricity, according to civil society groups.
The Philippine Working Group on the ADB issued this call days before the Bank’s 41st Annual Meeting of the Board of Governors in Madrid, Spain, on 3-6 May 2008.
Milo Tanchuling, secretary general of the Freedom from Debt Coalition, said ADB should seriously reconsider its strategy of pushing for the participation of the private sector in the power sector.
“Clearly, today’s problems come from yesterday’s solutions. Our problem on the rising electricity rates today is a result of the ADB’s private sector participation strategy,” said Tanchuling, adding that the Masinloc coal-fired power plant is a case in point.
Masinloc case
“First, they funded the construction of Masinloc in the mid 1990’s. The total cost of the dirty power plant amounted to $687 million which the government owed mostly to the ADB. Then in 2001, the Bank pushed for reforms in the energy sector and funded the passage of the Electric Power Industry Restructuring Act (EPIRA) which pushed for the privatization of the state-owned power plants. The government, in pursuing this goal, attempted to sell Masinloc. But the sale of the ‘country’s gem’ failed at first due to lack of Power Purchase Agreements (PPAs) with distribution utilities and big end-users. The sale only consummated recently after the AES Corp. acquired the 660-MW plant in Masinloc, Zambales, at $930 million, with the help of the National Power Corporation securing 265-MW PPAs for the new owner and with the $200-million loan from ADB,” explained Tanchuling.
The Bank announced earlier that AES Corp. also raised $400 million from equity investments and subordinated loans, $35 million from a loan from the International Finance Corp. (IFC) and $295 million from loans from the IFC and four commercial banks. The AES Corp. has already paid the government in full last April 16.
“Where do you think this new Masinloc owner will get its return of investment? Obviously, from us, the consumers,” said Tanchuling. “And the ADB is allowing that because it is acting like a commercial bank, a great profiteer. It has profited a lot, in terms of repayments, from construction of the power plant to restructuring of the industry to privatization of Masinloc.”
Maris dela Cruz of EmPOWER Consumers said that in reality, the so-called power sector reforms or privatization program being peddled by the ADB is not about providing access to all, especially the poor nor it is about making power rates more affordable for the poor.
“In fact, the recent increase in electricity charges is because of the more expensive power bought through the wholesale electricity spot market (WESM) which is the heart of the privatization and restructuring program financed by the ADB. A separate funding for this was provided by the ADB which profits again from this in the process. With so much investments on this, the consumers still end up paying high electricity rates, now among the highest in the world,” dela Cruz said.
Further, FDC’s Tanchuling said that the power sector receives the largest sector loan in ADB’s portfolio, from financing the energy sources development in the 1970’s to early 1980’s, power crisis management in 1980’s to early 1990’s, up to electric power sector restructuring from mid-1990’s to present.
Private sector participation was first introduced in the 80’s and intensified in the 90’s, primarily to address the lack of capital of the government to finance the rehabilitation and construction of new power plants in the country to address the power crisis.
In the 21st century, the Bank wants full private sector participation – not just in management, operation, but full ownership of the utilities to free up government resources for this sector and use it instead for other services. This was the aim of the EPIRA whose passage in 2001 was facilitated by the $300-million loan from ADB.
Grain sector
Meanwhile, Alice Raymundo of the Task Force Food Sovereignty (TFFS) said the ADB is “guilty of compromising food security” not only in the Philippines, but also in some parts of Asia.
TFFS criticized the bank for its loan conditionalities that forced governments to deregulate and turn over agriculture to the profiteering private sector, citing the case of the Philippines and many other Asian member countries that are now threatened by the rice shortage.
The Philippines is among the world’s top rice producers (rank = 8 ) yet it remains a net importer of the staple. It was rice sufficient up to the early 80s but lost control and relied on importation since the early 90s. Current RP rice production can only cover for 80 per cent of the country’s needs.
“The ADB must be held accountable to the growing food insecurity in developing countries. Since its founding in 1967, the Bank had financed countless agricultural projects, but weakened farmers and communities instead of strengthening them. ADB supported the commodification of rice, application of market mechanisms and the price system in agriculture, liberalization and opening of trade,” Raymundo said.
“ADB projects like the Grain Sector Development Program (GSDP) in the Philippines and the Khulna-Jessore Drainage Rehabilitation Project in Bangladesh have been given with many policy conditionalities, including the removal of quantitative restrictions and lowering of tariffs of agricultural products. ADB conditionalities force countries to adopt policies that are harmful, especially those in the margins, farmers and fishers included,” Raymundo said.
“Many of the Bank’s projects are controversial and are considered “onerous” because other than its anti-poor conditionalities, the projects have destroyed lives. The Khulna-Jessore Drainage in Bangladesh now caused prolonged flooding in surrounding communities, causing families to lose livelihoods and wallow in poverty. The Philippines’ Grain Sector Development Program barely took off, and was cancelled after $100 million had been taken by government. In both instances, the supposed benefits are non-existent, and beneficiaries continue to suffer. The absurdity of it all is that the ADB will collect on these debts, no matter what,” explained Raymundo.
Higher electric rates a puzzler
BusinessMirror
25 April 2008, Page 1
http://www.businessmirror.com.ph/0425&262008/headlines04.html
By Paul A. Isla and Butch Fernandez
Reporters
THE Philippine Electricity Market Corp. (PEMC) reported that
intermittent operation and high demand for power supply from
coal-fired power plants have pushed up prices at the Wholesale
Electricity Spot Market (WESM).
The PEMC said the WESM’s final prices for the period covering February
26 to March 25 showed an average market price or effective settlement
price (ESP) of P6.72/kilowatt-hour (kWh), higher than the previous
month’s ESP of P5.73/kWh.
The Manila Electric Co. (Meralco) spot purchases of electricity
averaged P8.94/kWh, which is significantly higher than the WESM
average for this month.
During this period, Meralco was mostly buying during the peak hours
when electricity prices were high. Furthermore, Meralco purchased only
8.07 percent of its total demand from the WESM.
The higher prices for March were driven by the increase in temperature
that, in turn, pressed users to use more power and use their air
conditioners longer.
“Just like any market, prices change depending on supply and demand,
and with the onset of summer, increased temperature causes us to use
more electricity which results in higher spot prices,” explained Lasse
Holopainen, president of PEMC.
Besides the increase in temperature, there was also a marked decline
in power availability from coal plants, to 21.3-percent output in
March from 29.9 percent in February. Calaca and Masinloc were down and
others were on intermittent outage during this period as well.
“When the cheaper generators are not available, the prices rise as
well [since] we are forced to dispatch more expensive plants,” said
Holopainen.
In any case, the electricity consumer group EmPOWER Consumers on
Thursday urged the Energy Regulatory Commission (ERC) and industry
players to explain the sharp increase in electricity rates this month.
On Tuesday Meralco announced an adjustment in its electricity charges
this month of P0.5188 per kilowatt-hour (kWh) in generation, P0.30/kWh
in distribution, P0.0759/kWh in transmission, and P0.0770/kWh in
system-loss charge.
Milo Tanchuling, secretary-general of Freedom from Debt Coalition and
convenor of EmPOWER Consumers, said in a letter to the ERC dated April
23 that the recent news on increase in electricity charges in Meralco
franchise areas is contrary to ERC’s statement early this month that
there will be no power rate increase in the next two months.
The consumer alliance recalled as well President Arroyo’s statement at
the Philippine Energy Summit early this year that her administration
will find ways to reduce electricity rates in the country-with the
situation now, that remark seems but an empty promise, the alliance added.
“In this time of food/rice crisis, when the value of people’s money
continues to diminish, a P150-monthly increase in electricity bill
further aggravates the miserable state of the Filipinos, especially
the poor. The government is accountable to the people, thus it owes us
consumers an explanation for the increase in electricity charges,”
wrote Tanchuling to the ERC.
At the Senate, Minority Leader Aquilino Pimentel Jr. also wanted an
explanation and prodded the Committee on Energy to look into the
reasons the Meralco increased electric charges.
In a statement, Pimentel acknowledged that Meralco’s latest rate
increases may be justified if one looks only at the rising cost of
crude oil which is hitting $120 per barrel but pointed out “there is
also Section 23 of Epira (Electric Power Industry Reform Act) that
obligates electric distribution utilities to supply electricity at the
least cost to their so-called captive market.”
“It may be true that Meralco’s buying electric power from National
Power Corp. and Wholesale Electricity Spot Market may be more costly
than buying it from independent power producers [IPPs] like the Sta.
Rita and San Lorenzo power plants,” he said. “The problem, however, is
that if Meralco buys electricity from those IPPs, it may be
cross-subsidizing them as these IPPs are reportedly owned partially,
if not fully, by Meralco. That would, in effect, violate the principle
that a firm that distributes electricity may not also produce it.”
Pimentel insisted there is an urgent need for Congress to review the
Epira law to spare consumers from the spiraling cost of electric power
by some legal device like mandating Napocor to impose its
rate-reduction powers on power distributors in times of emergency.
Power firms urged to explain rate hike in April
By Abigail L. Ho
Philippine Daily Inquirer
First Posted 06:21:00 04/25/2008
MANILA, Philippines-EmPOWER Consumers, a recently formed electricity
consumers group, is calling on the Energy Regulatory Commission (ERC)
to compel all power industry stakeholders to explain why electricity
prices suddenly spiked this month.
In a letter to the ERC, the group, together with the group Freedom
from Debt Coalition and the National Association of Electricity
Consumers, said the regulatory body should convene a meeting of major
industry players, such as power retailer Manila Electric Co.
(Meralco), government-owned producer National Power Corp., state-owned
National Transmission Corp., power bourse operator Philippine
Electricity Market Corp. and the privatization agency Power Sector
Assets and Liabilities Management Corp.
EmPOWER Consumers convener Milo Tanchuling said the sudden rise in
Meralco rates was contrary to the ERC’s assurance that rates would
remain steady.
Meralco customers this month will see their April bills go up by
P0.6717 per kilowatt-hour (kWh). Factoring in all rate adjustments for
April, Meralco residential customers consuming 200 kWh a month will
see their bills increase by 8.95 percent or by P149.
According to data from Philippine Electricity Market Corp. (PEMC),
which operates the wholesale electricity spot market (WESM), the
average market price at the electricity bourse for the period from
Feb. 26 to March 25 was only P6.72 per kWh-lower than the price at
which Meralco bought electricity from WESM.
Meralco’s spot purchases of electricity averaged P8.94 per kWh, PEMC
data showed, as the utility bought most of its Wesm-sourced power
during peak hours, when prices were high.
“It’s really [Meralco's] call on when to buy and at what price,” PEMC
president Lasse Holopainen said. “We’re just the market. We don’t
dictate how [WESM participants] make their … decisions.” With
editing by INQUIRER.net
Electricity consumers demand explanation from ERC for sudden increase
PRESS RELEASE
EMPOWER CONSUMERS
Freedom from Debt Coalition
24 April 2008
A newly formed-multisectoral alliance of electricity consumers called EmPOWER Consumers has demanded an explanation for the sharp increase in electricity rates this month from the Energy Regulatory Commission (ERC) and other concerned power industry players.
Two days ago, Meralco announced that electricity charges for this month will rise due to per kilowatthour (kWh) increase of 51.88 centavos in generation , 30-centavos in distribution, 7.59-centavos in
transmission, and 7.70-centavos in system loss charge. About seventy percent of the increase comes from the increase in generation rates which Meralco claims to be due to price of electricity traded at the Wholesale Electricity Spot Market (WESM) also shot up from P5.94 in February to P10.68 per kilowatthour in March.
EmPOWER Consumers expressed disappointment over this development. Milo Tanchuling, Secretary General of the Freedom from Debt Coalition and one of the convenors of EmPOWER Consumers, stated in a letter by the consumer alliance to the Energy Regulatory Commission dated 23 April 2004 that the recent news on increase in electricity charges in Meralco franchise areas is contrary to the pronouncement of the ERC early this month that there will be no price increase in the next two months.
The consumer alliance added that it also shows that Gloria Arroyo’s statement at the Philippine Energy Summit early this year that her administration will find ways to reduce electricity rates in the country was nothing but a lip service.
“In this time of food/rice crisis, when the value of people’s money further diminishes, a P150-monthly increase in electricity bill further aggravates the miserable state of the Filipinos especially the poor. The government is accountable to the people, thus it owes us consumers an explanation for the increase in electricity charges,” Tanchuling said.
Together with FDC, the National Association of Electricity Consumers (NASECORE) represented by its president Pete Ilagan, also a member of EmPOWER Consumers, had urged the ERC to immediately convene a meeting to explain the recent increase to the electricity consumers. The groups also asked ERC to invite in that meeting the concerned power industry players such as Meralco, National Power Corporation, Power
Sector Assets and Liabilities Management Corporation, Transco, and the Philippine Electricity Market Corporation.
Consumer group wants Meralco stripped of AGRA
GMANEWS.TV
Business
http://www.gmanews.tv/story/84668/Consumer-group-wants-Meralco-stripped-of-AGRA
3/13/2008 | 05:34 PM
MANILA, Philippines – A group of electricity consumers called the EmPower asked Thursday the Energy Regulatory Commission (ERC) to scrap the pricing scheme to prevent the Manila Electric Company (Meralco) from allegedly implementing non-transparent electricity rates increase.
In a statement, EmPower wanted the automatic generation rate adjustment mechanism or AGRA junked. The group also asked ERC to prohibit Meralco from enjoying cross ownership besides barring the firm from participating in the wholesale electricity spot market (WESM).
The group, which is an alliance of electricity consumers in the country, warned that Meralco might again reflect in its charges within the month almost a 20-centavo per kilowatt-hour increase in generation charge.
“This will mean a total increase of about P45/kwh to P67/kwh for those consuming 200 to 300 kilowatt-hours a month,” EmPower said.
EmPower said that the AGRA mechanisms being implemented by the ERC has treated electricity consumers as mere recipients of notices and announcements of increases in the generation charges without conducting public hearing and consultation with consumer leaders.
“It is very seldom that ERC finds over-charging in the generation charge and that the refund to be implemented after discovery of over charges, if there were any, does not truly return the true cost of money paid by people based on the experiences in past refunds by Meralco,” EmPower said.
The group disputed Meralco’s claim that generation charge is a pass through charge and that nothing goes to Meralco.
“Such may be true for distribution utilities that do not buy electricity from their sister generation company. But because the Electric Power Industry Reform Act (EPIRA), which governs the power industry in the country allows for cross ownership between generation and distribution companies, the Lopezes who control Meralco are able to benefit from the transactions between Meralco and its electricity supplies that area also Lopez-owned,” the EmPower said.
The group said that cross ownership between generation and distribution and all other subsectors in the power industry must be prohibited to prevent price collusion, manipulation and market abuses.
“Surprisingly, even when Meralco only gets 10 percent of its electricity requirement from WESM, the overall generation charge to be collected from the consumers has still increased. Meralco can actually get cheaper electricity if the interest it truly protects is that of its consumers and not of its owners who have also stakes in the generation sector,” EmPower said.
EmPower said that the Lopezes through the First Pacific Holdings Corporation have about 18 percent ownership in Meralco while the government only has a little more than 20 percent through the government financial institution that have investments in the utility.
EmPower said the Lopezes may now already have about 34 percent ownership of the country’s biggest distribution utility if the buyout of its partner in First Philippine Union Fenosa that have a 9.1 percent share in Meralco and buyout of 6.6 percent of the issued shares of Meralco from the Meralco pension fund had pushed through.
They added that the Lopezes also get some 40 percent of its electricity from sister companies First Gas Sta. Rita, First Gas San Lorenzo and Duracom.
EmPower said the ERC has not also resolved the price manipulation in WESM that happened in 2006.
“Because of price manipulations, the prices of electricity have shot up in 2006 from less than P3/kwh to about P5/kwh. How sure are we this time that such abusive behavior in WESM does not exist anymore and that the prices of electricity price have P3.40/kwh to about P6/kwh like in the past,” the EmPower said.- GMANews.TV
Electricity consumers call Meralco power rates hike non-transparent,
PRESS RELEASE
EmPOWER Consumers
13 March 2008
As Meralco consumers face yet another increase in their electricity bills this month, EmPOWER Consumers, an alliance of electricity consumers in the country, has demanded anew for the scrapping of automatic generation rate adjustment mechanism (AGRA), prohibition of cross ownership, and independent review of the operations of wholesale electricity spot market (WESM). The group believes that AGRA, cross ownership, and WESM are instrumental in the non-transparent and possibly unjust power rates increase.
Meralco will reflect in its charges this March the almost 20-centavo per kilowatthour increase in generation charge. This will mean a total increase of about P45/kwh to P67/kwh for those consuming 200 to 300 kilowatthours a month.
According to EmPOWER Consumers, the AGRA mechanism being implemented by the Energy Regulatory Commission has treated electricity consumers as mere recipients of notices and announcements of increases in the generation charges as no public hearing nor consultation with them takes place anymore prior to the implementation of the increase or adjustment in rates.
The group added that even the so-called ERC review of the charges under AGRA will not help, if at all, in averting or preventing possible abuses by utilities. “It is very seldom that ERC finds over-charging in the generation charge and that the refund to be implemented after discovery of over charges, if there were any, does not truly return the true cost of money paid by the people based on the experiences in past refunds by Meralco,” the group said.
EmPOWER Consumers also belied Meralco’s claim that generation charge is a pass through charge and that nothing goes to Meralco. The group explained that such may be true for distribution utilities that do not buy electricity from their sister generation company. But because the Electric Power Industry Reform Act (EPIRA) which governs the power industry in the country allows for cross ownership between generation and distribution companies, the Lopezes who control Meralco are able to benefit from the transactions between Meralco and its electricity suppliers that are also Lopez-owned.
The group emphasized that cross ownership between generation and distribution and all other subsectors in the power industry must be prohibited to prevent price collusion, manipulation, and market abuses. “Surprisingly, even when Meralco only gets 10 percent of its electricity requirement from WESM, the overall generation charge to be collected from the consumers has still increased. Meralco can actually get cheaper electricity if the interest it truly protects is that of its consumers and not of its owners who have also stakes in the generation sector.”
The Lopezes through the First Pacific Holdings Corporation have about 18 percent ownership in Meralco while the government only has a little more than 20 percent through the government financial institutions that have investments in the utility. The Lopezes may now already have about 34 percent ownership of the country’s biggest distribution utility if the buyout of its partner in First Philippine Union Fenosa that have a 9.1 percent share in Meralco and buyout of the 6.6 percent of the issued shares of Meralco from the Meralco pension fund had pushed through. The Lopezes also get some 40 percent of its electricity from sister companies First Gas Sta. Rita, First Gas San Lorenzo, and Duracom.
Lastly, the consumer alliance raised the issue of unresolved price manipulations in WESM that happened in 2006. “Because of price manipulations, the prices of electricity have shot up in 2006 from less than P3/kwh to about P5/kwh. How sure are we this time that such abusive behavior in WESM does not exist anymore and that the prices of electricity traded there are real and not manipulated when there was a dramatic increase again in electricity price from P3.40/kwh to about P6/kwh like in the past?”
The group demanded for an independent review to be undertaken in the 2006 price manipulations and also on the current electricity trading system to, at least, erase the doubts of the consumers.
Related Stories
Four bidders prequalify for Transco
BusinessMirror
16 November 2007, Page 1
http://www.businessmirror.com.ph/1116&172007/headlines04.html
Four bidders prequalify for Transco
By Paul Anthony A. Isla
Reporter
GOVERNMENT-RUN Power Sector Assets and Liabilities Management Corp. (PSALM) has prequalified four of five interested bidder groups for the 25-year concession to operate the National Transmission Corp. (Transco).
PSALM said the four qualified bidders will participate in the final stage of the Transco bidding process, which is the submission of the technical proposal and financial bid scheduled on December 12.
It named the prequalified bidder groups as the consortium of Monte Oro Grid Resources Corp. (MOGRC) and State Grid Corp. of China (SGCC); consortium of Two Rivers Pacific Holdings Corp. and Terna-Rete Electtrica Nazionale SPA; San Miguel Energy Corp. and TPG Aurora BV; and the consortium of Citadel Holdings Inc. and Power Grid Corp. of India Ltd.
Monte Oro is represented by its chairman and president Walter W. Brown, while Two Rivers is represented by its president Jose Ma. K. Lim.
San Miguel Corp. chairman and president Ramon S. Ang represents San Miguel Energy, while Amelia S. de la Rosa represents Citadel.
The prequalification group composed of the technical teams of PSALM and Transco conducted and completed the evaluation of the prequalification proposals.
The results of the prequalification process were finalized after the reconsideration period, which is a standard procedure for bidding transactions as stipulated in the Government Procurement Reform Act.
The PSALM project management team and its Transco counterpart for the Transco privatization thoroughly evaluated the prequalification proposals of the interested bidders to ensure the accuracy, authenticity, completeness, veracity and validity of all documents and information submitted in compliance with the prequalification criteria.
The second stage of the Transco privatization process, the prequalification procedure, enables PSALM to assess the financial and technical capabilities of the investor groups interested in bidding for the Transco concession.
The procedure assures strict compliance with the provisions stipulated in the Electric Power Industry Reform Act (Epira).
The prequalification process is conducted to ensure that only serious bidders with proven domestic or international experience as a leading transmission-system operator will be qualified to participate in the final bidding.
Bidders for the Transco concession must have a member or affiliate with experience in operating and maintaining electricity-transmission systems comparable to that of the Philippines, consisting of not less than 6,000 circuit kilometers of transmission lines operating at 115 kilovolts (kV) or higher, including a system operating at not less than 230 kV and having a peak demand of at least 6,000 megawatts.
The member of the prospective bidder who meets the technical prequalification criteria must have a net asset value or market capitalization of $500 million.
Bidders should also have the capability to form a concession that will meet the 60-percent Filipino ownership restrictions for grantees of a public-utility franchise as stipulated in the Philippine Constitution.
The largest foreign and Filipino-members of the prospective bidder will need to pass a net-asset-value or market-capitalization criteria.
Based on the results of its regular dialogue with the prospective Transco bidders, PSALM is finalizing the transaction documents for the concession.
PSALM also conducted a series of management presentations from November 6 to 8 to discuss with the bidders relevant information about the transmission business. Meanwhile, a group of consumer advocates expressed opposition to the privatization of the Transco through a 25-year concession contract.
EMPOWER Consumers said bidding out the right to operate and maintain the $3-billion Transco, a utility imbued with public interest, poses a threat to the national security as well as the economy, with a private company taking hold of all the transmission facilities which provide a highway for electricity to run throughout the country.
“We can be held hostage by profit-driven private companies once Transco is under their control. The winning bidder of Transco would be holding the switchboard of the entire country and has the power to turn it off at will. Even Malacañang would be on its knees before Transco’s would-be owners begging for electricity once this happens,” the group warned.
“The private company that would operate and maintain Transco would only be accountable to the owners, and not to the public. It could do whatever it wants with the transmission lines, hold power at source or raise prices exorbitantly to recover costs,” said Milo N. Tanchuling, EMPOWER Consumers spokesperson.
Tanchuling also berated PSALM president Jose Ibazeta for his announcement that the bidding of Transco would be done behind closed doors as requested by the bidders to withhold their identity from the public.
“Transco should remain public to ensure a steady and reliable supply of electricity nationwide, and that all privatization efforts by the government on the power industry should be put to stop. Instead, a thorough assessment of the restructuring and privatization of the power industry has to be undertaken by the government,” said Tanchuling.
Broad electricity consumers group call for a halt to Transco privatization
EmPOWER Consumers
Press Release
November 14, 2007
A broad consumer group of electricity users with 40 member-organizations today expressed opposition to the privatization of the National Transmission Corporation (Transco) through a 25-year concession contract. The group called for a halt to the privatization of this crown jewel as the government prepares for the pre-bid conference for TRANSCO on November 15.
EmPOWER Consumers said bidding out the right to operate and maintain the $3-billion Transco, a utility imbued with public interest, poses a threat to the national security as well as the economy with a private company taking hold of all the transmission facilities which provide a highway for the electricity to run throughout the country.
“We can be held hostage by profit-driven private companies once Transco is under their control. The winning bidder of Transco would be holding the switchboard of the entire country and has the power to turn it off at will. Even Malacañang would be on its knees before Transco’s would-be owners begging for electricity once this happens,” warned the group.
Milo N. Tanchuling, EMPOWER Consumers spokesperson and Freedom from Debt Coalition Secretary General, said that “The private company that would operate and maintain Transco would only be accountable to the owners and not to the public. It could do whatever it wants with the transmission lines, hold power at source or raise prices exorbitantly to recover costs.“
News accounts showed that the number of bidders pre-qualified to bid for the National Transmission Corp.’s 25-year concession contract has been trimmed down to three.
These include Terna-Rete Elettrica Nazionale S.P.A. of Italy with Two Rivers Holdings Pacific of the Metro Pacific group of businessman Manny Pangilinan; Malaysian group Tenaga Nasional Berhad with Newbridge Asia LLP in partnership with Triratna Holdings; and State Grid of China with Monte Oro Resources.
Tanchuling also berated Jose Ibazeta, president of the Power Sector Assets and Liabilities Management (PSALM) Corp., for his announcement that the bidding of Transco would be done behind closed doors as requested by the bidders to withhold their identity from the public.
He pointed out that holding Transco’s bidding out of public scrutiny violates Art. II, Sec. 28 and Article III, Sec. 7 the Constitution and the Government Procurement Act (RA 9184) which mandates that there must be “transparency in the procurement process” and guarantees “public monitoring” to ensure that the bidding process is done in accordance to the law.
He said that bidding out Transco to a private company may help the government in repaying power sector debts, but long-term pain will be experienced with rates expected to go up once the operation of the transmission corporation is privatized.
Further, he noted that the winning bidder of Transco would have clean books as the loans incurred by the company would be absorbed by the government and passed on to the public.
“The Philippines is rich in experience in terms of privatization and we have already witnessed with our very eyes the horrors it brings to us. We do not expect anything good to happen to this undertaking besides giving the people more reason to castigate the government for its endless miseries,” he said.
Tanchuling reiterated that Transco should remain public to ensure a steady and reliable supply of electricity nationwide, and that all privatization efforts by the government on the power industry should be put to stop. Instead, a thorough assessment of the restructuring and privatization of the power industry has to be undertaken by the government. (30)
EmPower Consumers bare $9.1 billion power sector debts, P5.60/kWh electricity rate hike
PRESS RELEASE
October 1, 2007
EmPower Consumers bare $9.1 billion power sector debts,
P5.60/kWh electricity rate hike
Group vows to block increase
Electricity consumers are up for a surprise next year as electricity rates are expected to increase three times than its price six years ago prior to the passage of the Electric Power Industry Reform Act (EPIRA).
EmPOWER Consumers, a newly-formed broad alliance of electricity consumers – residential and industrial/commercial, bared this during its launching today as they vowed to block such onerous hike that would be heavily and unnecessarily burden the poor electricity consumers.
The electricity consumers’ alliance is composed of the Freedom from Debt Coalition, former Akbayan Partylist Rep. Etta Rosales, NASECORE, Katipunan ng mga Magsisibuyas sa Nueva Ecija, and a number of groups that are either residential, industrial or commercial electricity consumers.
Former Akbayan Partylist Rep. Etta Rosales pointed out in her presentation the $9.1 billion power sector debts which dwarf the amount of potential debt from the ZTE-NBN deal is one of the two reasons for the increase. The other reason is the recovery of generation companies from traded electricity at the wholesale electricity market (WESM).
“The generation companies would be recovering P2.60/kilowatt-hour with the decision of the Energy Regulatory Commission absolving the Power Sector Assets and Liabilities Management Corporation (PSALM) from price manipulation which kicked up trading prices to P10 per kWh last year,” explained Pete Ilagan of NASECORE.
Besides this, the national government and PSALM would also be recovering P2/kWh from their stranded costs, largely due to the contracts undertaken by the state-owned power company with the independent power producers (IPPs).
“The Department of Energy said the $9.1 billion debt would be paid either through an increase in electricity rate or through borrowings. Either way, the Filipino people would be saddled by this $9.1 billion debt which far outweighs the potential $329 million debt from the anomalous ZTE contract for the National Broadband Network project,” said FDC Secretary General Milo Tanchuling.
The group also hit Meralco following the announcement of the National Power Corporation (NPC) that a 12-centavo per kilowatt-hour rate reduction will be experienced by Meralco customers for the electricity Meralco had sourced from NPC for the past 10 months.
EmPOWER Consumers said the rate reduction could have been enjoyed earlier and could have been higher had Meralco acted on this earlier and taken more electricity from NPC early on. “Meralco deprived consumers of such relief as it only sourced about 30 percent of its load requirement from NPC while a bigger volume of electricity is sourced from WESM until late last year despite NPC’s lower price.”
Meralco recently sources 15 percent from the WESM despite the volatility of its prices while the rest is from independent power producers owned by the Lopezes. Instead of getting the full 30 centavos per kilowatt-hour rate reduction, consumers would be getting only 40 percent of it..
EmPOWER Consumers said it would demand from the government to make true its promise to bring down electricity rates.
“The fulfillment of this promise is long overdue. Enough of band-aid solutions and empty rhetoric!” the group said.
EmPOWER Consumers vowed to oppose the privatization of the National Transmission Corp. and the continuous payments to the onerous IPP contracts by the government. It also called for the scrapping of the Value Added Tax on power which adds up to the financial burden of the people. (30)
