Arroyo, upon recommendations of Energy Secretary Angelo Reyes, on Friday declared that there is power crisis in Mindanao. She has also adopted the energy chief’s recommendation to invoke Section 71 of the Electric Power Industry Reform Act which allows Congress to authorize, through a joint resolution, the establishment of additional generating capacity under terms and conditions that it will approve.

Some parts of Luzon like Metro Manila have also been experiencing rotating brownouts lately due to alleged power shortage in the grid.

“First of all, we doubt the veracity of claims by the Department of Energy and Malacanang that there is power shortage in the country,” said EmPOWER Consumers Alliance (EmPOWER) in a statement.

According to Freedom from Debt Coalition (FDC), co-convener of EmPOWER, there is still huge energy surplus in the country, citing Department of Energy figures for year 2008 which indicate a surplus of about 4,000 MW based on 13,049 MW dependable capacity and peak demand of only about 9,054 MW.

“We have a growing suspicion that the energy crisis could be hoax and just being created by the government to justify need for nuclear power plants in the country and to enter into new contracts with the independent power producers (IPPs),” said FDC Secretary General Milo Tanchuling.

The coalition has long opposed the operation of the Bataan Nuclear Power Plant. “What the government should do instead is conduct a technical review of NPC plants especially the IPP plants,” added Tanchuling.

“Second, we question the real motive behind this dim scenario being painted by the government, especially at a time when the country is heading for national elections,” added EmPOWER.

Instead of emergency powers to the president, the group called for an “immediate thorough investigation and participatory planning.”

The umbrella alliance of electricity consumer groups called on Congress—before it even considers granting emergency powers to the president or allow government to enter into ominous contracts with the independent power producers (IPPs) to address the so-called power crisis—to instead conduct a thorough investigation of the energy situation in the country, stressing the participation of electricity consumers in this process.

“The participation of electricity consumers in decisions that address the present energy situation is very important since we are always made to bear in the end the impact of these decisions. We do not want a repeat of the solution to enter into contracts with IPPs even when they were so onerous and to the detriment of the public” emphasized EmPOWER.

In Mindanao, Lanao Power Consumers Federation (LAPOCOF) also had qualms about this energy crisis claim by the government. “The power shortage may be true, but we are also in the dark as to the real truth on the energy situation in Mindanao,” said LAPOCOF president Dr. Melchie Ambalong.

“For all we know, this situation is being manipulated to increase power rates since this power shortage scenario has long been painted to us and the government saw justification for this with the present El Nino,” added Ambalong whose group has opposed the privatization of Agus-Pulangi hydropower complexes.

LAPOCOF bared that for several times, during deliberations last year on the privatization of Agus-Pulangui hydropower complexes, both the DoE and the Power Sector Assets and Liabilities Management (PSALM) Corp. could not really give figures on the real energy requirement in Mindanao.

Electricity consumer group in Iloilo also shared the position of EmPOWER, FDC, and LAPOCOF to have thorough investigation on the power crisis claims. The Ilonggo Consumers Advocacy and Welfare (ICAW) said that there is indeed a need to verify accuracy of government data.

“In the past few years, the government had consistently said that there was power shortage in Panay region, but in the recent brownout in Luzon, Visayas augmented the electricity requirement in Luzon,” said Ted Ong of ICAW. “Power shortage is not yet felt at least in Panay, but if there were any occasional brownouts, it’s mainly due to efficiency, not supply issue – due to preventive maintenance shutdowns,” Ong added.

Contact person:
Maris dela Cruz, EmPOWER Consumers co-coordinator, 0929682990

EmPOWER Consumers, chapters of the Freedom from Debt Coalition (FDC) in General Santos, Davao, Western Mindanao, Eastern Visayas, Cebu, the FDC National Secretariat,  and representatives of Electric Cooperative Conversion Movement (General Santos)  and electric consumers group in western Mindanao vowed to work together and reach out to more electricity consumers in the country in (re)claiming POWER from the few who are presently controlling the power industry, specifically the electric cooperatives.

The electric cooperative workers and consumers united in claiming “KOOP KO ‘TO” (this is my cooperative) and promised to work together in realizing this.

The National Conference was a joint initiative by the Freedom from Debt Coalition and Alliance of Progressive Labor (APL) in cooperation with Freidrich Ebert Stiftung (FES) and the Foundation for Sustainable Society, Inc. (FSSI).

I. IT WILL DEFINITELY INCREASE OUR ALREADY HIGH ELECTRICITY RATES

a) To Attract Buyers.  In preparation for privatization, generation rates are gradually increased so that it will be attractive to buyers.

b) For Competitive Pricing. When retail competition starts, the other producers of electricity such as coal, geothermal and oil which are more expensive than Hydro can be competitive against hydro.

We do believe that there are going to be incremental hikes again and again till NPC is up for bidding by 2011.

c) Gain Motive. The higher the winning bidder bids, the higher the electricity price we have to pay in the future so the winning bidder can recover its investment. Electricity rates are also expected to rise as a consequence of privatization as investors would try to recover their investments the soonest time possible.

For NPC to operate and maintain the aforesaid Agus and Pulangui generating plants, the Gain Motive is not a factor. There is only the ROI or Return on Investment to be considered

d) Free Market Trading. We must bear in mind that the heart of the EPIRA is deregulation thru privatization of generation plants. It is envisioned that with a free market in place, electricity rate will go down based on the assumption that retail competition will drive prices down.

But the experience of Luzon with the Wholesale Electricity Spot Market (WESM) which started trading in 2006, is that the recent high rate of electricity in Luzon is because of the more expensive power bought through the WESM. Contrary to its mission of providing good choice and cheap supply of electricity, the WESM has become a trading center of the most expensive electricity in the country.

In March, 2009 its peak trading was P10.68/kWh and in April, it reached almost P12/kWh. If you add to that the Transmission, Distribution, Universal Charges, etc., Luzon has one of the highest electricity rates in the world.

e) Market Power/Abuse. Since  the Agus/Pulangui Hydro Complex is 55.38% of the total  capacity available to the Mindanao Market, there is a high  possibility that a private firm owning the Agus/Pulangui Complexes would profitably drive up prices since it controls a significant chunk of the market. Given the weak regulatory tradition in the Philippines, the most likely scenario is the exercise of market power by the firm owning the Agus/Pulangui complex with price manipulation rather than competitive pricing.

Added to that is the possibility that the private firm owning the Agus/Pulangui Complexes  which can dictate the price would be able to gobble up other smaller plants which cannot withstand the competition. Or smaller plants would be forced to merge with the dominant player. With this scenario there would be no more retail competition defeating the purpose of the EPIRA.

Presently the WESM operation of Luzon brought about a transition from government monopoly to an enhanced private monopoly. Hence, instead of rate reduction, Luzon has one of the highest rates today.

f) Independent Power Producer Administrator (IPPAs).

For IPPs with contracts expiring after 2010, PSALM is required to appoint IPP Administrators or “middlemen” thru public bidding to manage the plants until such time the contracts have expired. In Mindanao, we have the Villanueva Coal Plants expiring in 2031.  These “middlemen” will surely jack up prices. But if Hydro maintains its cheap rates which will only happen if it is not sold, then these IPPAs could be controlled.

g) Cross- Ownership

Once Agus/Pulangui Complexes is sold, it may also happen that the new owner may own or may have controlling interests in distribution utilities because “cross- ownership” is allowed and may result in “sweetheart” supply contracts between distribution and generation.

II. Competitive Edge for Mindanao/ Investor Incentive

Mindanao’s greatest competitive advantage is the low cost of power it presently enjoys from our hydro plants. Effective March, 2009, the generation charge for the Philippines approved by ERC are as follows;

Luzon       =  Php 4.2648 /kwh

Visayas    =  Php 4.0339 / kwh

Mindanao =  Php 2.8177 /kwh

The reason why Mindanao has the lowest generation charge is because of the existence of the Agus /Pulangui hydro complexes. This is the edge that Mindanao has over Luzon and Visayas. In terms of infrastructure, development, peace and order, etc, we lag behind Luzon and Visayas. We cannot afford losing one edge, the low cost of electricity which could be the only major come on for investors to set up establishments in Mindanao. Investments which would generate employment that would improve the buying power of the people which in turn is a driver for businesses to thrive.

III. High RORB (Return On Rate Base)

For 2008, the rate base current audited value of all NPC-Agus /Pulangui Complexes is Php14,327 billion. The net revenue is Php 4,927 Billion which gives an RORB of 39.66%.

The high rate of return is just tremendous at nearly 40%.

IV. Sale of Other Government Assets

The Masinloc Geothermal Plant located at Zambales is valued at $930 Million. The investors paid only 40% and the remaining balance is payable for 7 years at $80 Million yearly which is actually the income of the plant itself.

NGCP put in $987.5 Million or 25 % in acquiring the right to operate TRANSCO which is valued at $3.95 Billion. The remaining $2.962 Billion or Php148 Billion (at Php50.00 to $1.00) is to be paid in 15 years. TRANSCO is earning Php15 Billion per year which is more than enough to pay NGCP’s yearly installment. In other words NGCP has only a minimal investment in its acquisition of a highly profitable jewel of our country.

EPIRA simply transferred the monopoly privileges from the state to “unbundled” interests of private and foreign state run conglomerates (Japanese, Chinese and Korean).

We must not forget our tragic experience with the privatization of the National Steel Corporation.

We are afraid that the Agus/Pulangui complexes, the Patrimony of Mindanao will be sold at a giveaway price to exploitative conglomerates which are mostly foreigners.

V. Security of Supply

a) Sabotages and other Security Risks which is an integral part of the operation and maintenance of our Power Plants which the present NPC is able to address quickly because of its experience in dealing with these situations.

We have this disturbing experience with NGCP, the concessionaire of our transmission lines. Last Nov 2008, there were 16 sabotaged towers of the 138 KV lines. Five were in the Saguiaran to Kibawe line via Bubong, Lanao del Sur. Repair has just started  this month, August 2009, (10 months).because of one reason or another. It has compromised the supply to Davao because coincidentally, Geothermal plant # 2 in Kidapawan broke down. Such that supply to Davao is insecure as of now. With TRANSCO before, these incidents would have been dealt with at once.

b) Labor Disputes

If privatized, Crippling Strikes may ensue. The employees have existing justified grievances now.

VI. Retail Competition in Mindanao

WESM began Commercial Operations in Luzon in June 2006 with 73% of NPC’s assets privatized. Presently groundwork for launching of the Visayas Supply Augmentation Auction (VSAA) is started which in time will lead to WESM operations in the Visayas.

There is yet no mention of any plan to start an open market in Mindanao.

The basis for privatizing NPC assets is for retail competition to start. Since it cannot yet start in Mindanao our Congress need not proceed with the sale of the Agus and Pulangui complexes.

In summary, there is this contradiction between the EPIRA’s goal to make electricity affordable versus EPIRA’s principle of deregulation thru privatization.  Placing priority on the latter will result in higher electricity prices, when the goal of affordable electricity must take precedence over the latter.

In Closing, we must bear in mind that the Local Government Code of 1991, Chapter 2 , Sec 294, states, “ The LGU must provide direct benefits … not only with reference to lowering electricity cost but also in lowering cost of water consumption. Electric supply and water supply cover basic services where people can really feel with satisfaction and gratitude the impact of low charges.”

Contact Person:

Dra. Melchora J. Ambalong (Of the Mindanao Commission on Women)

LAPOCOF President

Tel #’s ( (063) 221-5252, (063) 225-5094, Cel # 0922-817-6218

Isang mainit na pagbati sa lahat ng kasapi ng EmPOWER Consumers!

Ang pagtitipon na ito ay lubhang napapanahon bunga na rin ng patuloy na walang-patid na pagtaas ng presyo ng kuryente mula sa kaliwa’t kanan na mga petisyon sa Energy Regulatory Commission. Alam natin na hindi lamang sa generation sector nagmumula ang mga aplikasyon sapagkat nariyan rin ang mga distribution utilities, transmission charge at ang bagong supply sector mula sa tinatawag na Wholesale Electricity Market o WESM na sampung porsyento na ating binabayarn mula sa generation charge. Sa pangkalahatan, ito ang mga bumubuo sa ating hinarap na hamon mula ng itayo natin ang EmPOWER Consumers noong Oktubre 1, 2007. Ilan sa mga tampok na isyu ng kuryente sa kasalukuyan ay tatalakayin ng ating mga tagapagsalita sa hapong ito.

Ganumpaman, ang ipinakikita nating kapasyahan na sumulong sa gitna ng napakaraming usapin sa industriya ng kuryente, pati na rin ang mga pagsusumikap na unawain ang kumplikadong mga usapin tulad ng mga teknikal at pinansyal na isyu mula sa ibat ibang petisyon, ay isang malaking inspirasyon sa milyon-milyong Pilipino na patuloy na lumalaban at pumapasan sa pabigat na mataas na presyo ng kuryente.

Ang Freedom from Debt Coalition, ay kaisa ninyo sa layunin magamit ang makatwirang bayarin sa singil ng kuryente at maging sa layunin na pagbabago sa ating pambansang mga polisiya. Pangunahing adbokasiya ng FDC kaugnay sa mataas na presyo ng kuryente ay ang panlipunan suliranin natin sa utang, na isa sa mayor na paliwanag kung bakit mataas ang ating mga binabayaran sa kuryente.

Sa puntong ito, nais kong bigyang pagpupugay ang lahat ng mga kasapi ng EmPOWER consumers sa layunin nito na pagkaisahan at tipunin ang malawak na bilang ng mga konsyumer upang sama-samang harapin ang hamon upang ibsan ang patuloy na paghihirap mula sa suliranin na ito.

Magandang hapon at mabuhay kayong lahat!

11. Masiway Hydroelectric Power Plant
12. Tiwi Geothermal Power Plant
13. Agus 6 Hydroelectric Power Plant
14. Agus 7 Hydroelectric Power Plant
15. Power Barge 102
16. Pulangi IV Hydroelectric Power Plant
17. Agus 4 Hydroelectric Power Plant
18. Agus 5 Hydroelectric Power Plant
19. Agus 1 Hydroelectric Power Plant
20. Agus 2 Hydroelectric Power Plant
21. Ormat-Makban Geothermal Power Plant
22. Power Barge 117 – Diesel Power Plant
23. Diesel Power Barge 101
24. Amlan Hydroelectric Power Plant
25. Iligan Diesel Power Plant
26. Limay Combined Cycle Power Plant
27. Power Barge 118
28. Panay Diesel Power Plant 1
29. National Power Corporation – Naga Power Plant Complex
30. National Power Corporation-Power Barge 104
31. Navotas I Gas Turbine Power Plant

INDEPENDENT POWER PRODUCERS
1. Cebu Private Power Corporation
2. East Asia Utilities Corporation
3. Duracom Mobile Power Corporation
4. East Asia Diesel Power Corporation
5. Angeles Power Inc.
6. ORMAT Leyte Co., Ltd.
7. Quezon Power (Philippines), Limited Co.
8. Panay Power Corporation
9. Bauang Private Power Corporation
10. Magellan Cogeneration, Inc.
11. Edison (Bataan) Cogeneration Corporation, Inc.
12. Trans-Asia Power Generation Corporation
13. Mindanao Energy Systems, Inc. (MINERGY)
14. Luzon Hydro Corporation
15. CIP II Power Corporation
16. Northern Mindanao Power Corporation
17. Western Mindanao Power Corporation
18. Southern Philippines Power Corporation
19. EEI – Power Corporation
20. Mindanao II Geothermal Partnership
21. Mindanao I Geothermal Partnership
22. PNOC Exploration Corp.
23. First Gas Power Corporation (Sta. Rita)
24. Northern Mini Hydro Corporation
25. Hydroelectric Development Corporation
26. Island Power Corporation
27. Tarlac Power Corporation
28. Mirant Sual Corporation
29. Mirant Pagbilao Corporation
30. Mirant Island Generation Corporation
31. Mirant Navotas II Corporation
32. KEPCO Philippines Corporation (KEPHILCO) Thermal Power Plant (Malaya Thermal PP)
33. First Cabanatuan Ventures Corporation
34. CBK Power Company Ltd (Kalayaan I Pumped Storage Power Plant )
35. CBK Power Company Ltd (Caliraya Hysroelectric Power Plant )
36. CBK Power Company Ltd (Botocan Hysroelectric Power Plant )
37. San Roque Power Corporation
38. Toledo Power Company
39. Delta P., Inc.
40. Lazard Power Corporation
41. Cagayan Electric Power and Light Company, Inc. (Solar Photovoltaic Plant)
42. Coral Bay Nickel Corporation
43. Bubunawan Power Company, Inc.
44. Subic Power Corporation (ENRON Power Corporation)
45. Sorsogon II Electric Cooperative, Inc (Cawayan HEPP)
46. Hydro Electric Development Corp (change of ownership Talomo HEPP
47. FG Bukidnon Power Corp. (change of ownership – Agusan HEPP)
48. Trans-Asia Oil and Energy Development Corporation
49. Sta. Clara Power Corp. (Loboc Hydroelectric Power Plant)
50. National Power Corporation (Mak-Ban GPP)
51. NorthWind Power Development Corporation
52. National Power Corporation-Leyte Geothermal Power Plant
53. National Power Corporation-Masinloc Coal Fired Thermal Power Plant
54. Ilocos Norte Electric Cooperative , Incorporated (Agua Grande Mini Hydro Power Plant)
55. CE Casecnan Water and Energy Co., Inc.
56. National Power Corporation – Angat Hydroelectric Power Plant
57. First Gas Power Corporation’s San Lorenzo Combined Cycle Power Plant
58. CE Cebu Geothermal Power Company, Inc. (Upper Mahiao Geothermal Power Plant)
59. Visayas Geothermal Power Company
60. CE Luzon Geothermal Power Company, Inc.
61. Avon River Holdings, Corporation
62. Avon River Holdings, Corporation
63. Avon River Holdings, Corporation
64. CBK Power Company Ltd (Kalayaan II Pumped Storage Power Plant)
65. Batangas Coal-Fired Thermal Power Plant
66. Bacon-Manito Geothermal Power Plant Complex
67. KEPCO Ilijan Corporation (KEILCO)
68. People’s Energy Services (Barit Hydroelectric Power Plant
69. Palinpinon Geothermal Power Plant I and II
70. Angeles Electric Corporation (Petersville Power Plant)
71. Binga Hydroelectric Power Plant
72. Mid-Islands Power Generation Corporation
73. Bohol Diesel Power Plant
74. Magat River Hydroelectric Power Plant
75. Pantabangan Hydroelectric Power Plant
76. Davao Light and Power Company-Bajada Diesel Power Plant
77. Masiway Hydroelectric Power Plant
78. Tiwi Geothermal Power Plant
79. Agus 6 Hydroelectric Power Plant
80. Agus 7 Hydroelectric Power Plant
81. Power Barge 102
82. Pulangi IV Hydroelectric Power Plant
83. Agus 4 Hydroelectric Power Plant
84. Agus 5 Hydroelectric Power Plant
85. Agus 1 Hydroelectric Power Plant
86. Agus 2 Hydroelectric Power Plant
87. Ormat-Makban Geothermal Power Plant
88. Power Barge 117 – Diesel Power Plant
89. Diesel Power Barge 101
90. Amlan Hydroelectric Power Plant
91. Iligan Diesel Power Plant
92. Limay Combined Cycle Power Plant
93. Lubang Electric Cooperative, Inc.-Cabra Diesel Power Plant
94. Panay Electric Company, Inc.
95. Power Barge 118
96. Bohol I Electric Cooperative, Inc.-Janopol Mini-Hydroelectric Power Plant
97. Panay Diesel Power Plant 1
98. Samar I Electric Cooperative, Inc. -Ton-ok Mini Hydroelectric Power Plant
99. National Power Corporation – Naga Power Plant Complex
100. National Power Corporation-Power Barge 104
101. Oriental Mindoro Electric Cooperative, Inc.-Dulungan Mini-hydroelectric Power Plant
102. Linberg Philippines, Inc. – Philips Semiconductors, Inc., Light Industry and Science Park I
103. Linberg Philippines, Inc. – Philips Semiconductors, Inc., Light Industry and Science Park II
104. Navotas I Gas Turbine Power Plant
105. Asia Pacific Energy Corporation (APEC)
106. BOHECO I – Bagong Banwa Diesel Power Plant
107. BOHECO I – Balicasag Diesel Power Plant
108. BOHECO I – Batasan Diesel Power Plant
109. BOHECO I – Bilangbilangan Diesel Power Plant
110. BOHECO I – Cabilao Diesel Power Plant
111. BOHECO I – Cuaming Diesel Power Plant
112. BOHECO I – Hambongan Diesel Power Plant
113. BOHECO I – Mantatao Diesel Power Plant
114. BOHECO I – Mocaboc Diesel Power Plant
115. BOHECO I -Pamilacan Diesel Power Plant
116. BOHECO I – Pangapasan Diesel Power Plant
117. BOHECO I – Ubay Diesel Power Plant
118. Bicol Hydropower Corporation
119. CEBECO I – Mantayupan Mini-hydroelectric power plant
120. STEAG State Power, Inc.IPP L001

]]> http://empowerdconsumers.wordpress.com/2009/09/07/tools-%e2%80%b9-empowerdconsumers%e2%80%99s-weblog-%e2%80%94-wordpress/feed/ 0 empowerconsumers http://empowerdconsumers.wordpress.com/2009/08/26/psalm-files-petition-to-recover-p471-b-napocors-debts/ http://empowerdconsumers.wordpress.com/2009/08/26/psalm-files-petition-to-recover-p471-b-napocors-debts/#comments Wed, 26 Aug 2009 10:39:38 +0000 empowerconsumers http://empowerdconsumers.wordpress.com/2009/08/26/psalm-files-petition-to-recover-p471-b-napocors-debts/ ]]> BusinessWorld
August 24, 2009, Page 1
http://www.bworldonline.com/BW082409/content.php?id=002

Debt recovery plea to hike power costs
Jose Bimbo F. Santos

The Power Sector Assets and Liabilities Management Corp. (PSALM) has filed a petition seeking to recover about P471 billion in debts of National Power Corp. (Napocor), which could translate to an average increase of 30 centavos per kilowatt-hour for consumers.

The Energy Regulatory Commission (ERC) said it had scheduled hearings from September to October on the privatization body’s June petition regarding Napocor’s stranded debts, or unpaid financial obligations which have not been liquidated by the proceeds from state power asset sales.

Under Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA), stranded debts are included under the universal charge component of consumer power bills. These debts are outside the P200 billion which the government assumed.

In the petition, PSALM said a 17-year recovery period – which it favors – would translate to an additional 30 centavos in universal charges, while a 25-year recovery equals a 22.5-centavo hike.

PSALM – which is tasked to privatize all state-owned power assets – said gains would offset the shortfall during the period 2009-2024 due to inadequacy of privatization proceeds to cover capacity fees and debt service requirements.

An ERC official said the hearings starting next month would be staged nationwide.

This would be the NPC (Napocor) debt not covered by privatization proceeds and assumed by consumers as provided by law, ERC executive director Francis Saturnino C. Juan added.

The ERC would still have to inquire on the projections in the petition as well as the rates if these are accurate, Mr.. Juan said.

The rules for recovery of stranded debts were issued in 2007 but PSALM, in its petition, said calculations then had showed that the projected cash flows from operations as well as the proceeds from the privatization… were more than enough to finance NPC’s debt service and other financial obligations.

Conrad S. Tolentino, PSALM spokesman, said that it took time to update the data.

The privatization effort had not been that active as of now so it’s hard to estimate how much investors are willing to put up for the plants, he said.

Last year we already had the data but we had to recompute to be sure.

Privatization of the country’s generating assets hit the 73% mark after the sale of the 600-megawatt Calaca coal-fired power plant in Batangas to DMCI Holdings, Inc. last July.

PSALM was created under the EPIRA to manage the privatization of Napocor’s assets and independent power producer contracts, with the objective of liquidating all of the state power agency’s financial obligations.
]]> http://empowerdconsumers.wordpress.com/2009/08/26/psalm-files-petition-to-recover-p471-b-napocors-debts/feed/ 0 empowerconsumers http://empowerdconsumers.wordpress.com/2008/11/14/electricity-consumers-oppose-pre-bidding-conference-for-transco/ http://empowerdconsumers.wordpress.com/2008/11/14/electricity-consumers-oppose-pre-bidding-conference-for-transco/#comments Fri, 14 Nov 2008 14:42:59 +0000 empowerconsumers http://empowerdconsumers.wordpress.com/?p=110 ]]> A broad consumer group of electricity users with 50 member-organizations today expressed opposition to the pre-bidding conference that the government would be holding for the National Transmission Corporation citing several negative effects over the sale of its assets and liabilities to private hands.

EmPOWER Consumers said bidding out Transco’s assets, which is vested with public interest, poses a threat on the national security with a private company taking hold of all the transmission lines in the country.

“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 the public and the government would be at the mercy of the private company which would own Transco.

“The private company that would own Transco would only be accountable to its 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,” he said.

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 Power Sector Assets and Liabilities Management (PSALM) Corp. Jose Ibazeta for his announcement that the bidding of Transco would be done behind closed doors.

Ibazeta said the bidding would be done out of the public eye as requested by the bidders to withhold their identity from the people.

Tanchuling said he finds no reason for government to sell such a company which is bringing in the money for government in terms of revenues and exchange it for spot cash.

“What is more important to PSALM? The interest of the public or of these private bidders.  For a company which owns P15 billion annually and provides the connection between generation and distribution, there is so much public interest at stake that Transco’s bidding could not be done behind closed doors,” he added.

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.

Tanchuling said bidding out Transco to a private company would only provide immediate relief but long-term pain with rates expectedly going up once the transmission company is privatized.

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 said Transco should remain public to ensure a steady and reliable supply of electricity nationwide and all privatization efforts by the government on the power industry should be put to stop.
(30)

EmPOWER Consumers
Draft Press Statement
November 14, 2007

The ERC is a crucial agency responsible for the direction of the vital power industry and the fate of electricity consumers.  It regulates the whole power industry including penalizing fraud and abuse of market power by power utilities.  It also determines just and reasonable electricity rates and approves, grants, and revokes licenses, permits as well as certificates of compliance of electric industry participants.

In 2006, industrial electricity rates in the Philippines were the highest in Asia while residential rates were the third highest.

We are deeply concerned about serious allegations raised against acting ERC Chairperson Ducut, specifically on her supposed close ties with the Arroyo family as well as her reported links with the other Ducut’s who are with a consortium involved in an anomalous coal-supply contract with the National Power Corporation. If true, these ties may impair justness and prudence in ERC decisions, considering that the First Family and its cronies are now seemingly getting deeply involved in the power industry especially in transmission and generation sectors and attempting to take control of Meralco – the biggest distribution utility in the land – through its ally GSIS President Winston Garcia.

The consumers had suffered enough under the past ERC chairpersons who were politicians like Manuel Sanchez and Rodolfo Albano, Sr. Under their watch, ERC rendered decisions favorable to the power utilities but had adverse impacts on the consumers, especially the poor. They have shown glaring inability to discern the difference between the private interest and the public interest, and the lack of will to promote the public good against private greed.
During Albano’s watch, we saw electricity rates increased from P7 to as high as P11/kWh, ERC approved overcharging by MERALCO through its various rulings and ‘preliminary authority’, and overpricing that ERC blithely legitimized by approving electricity charges by MERALCO without the necessary diligence to ensure that the least cost was being passed on to consumers.

We also saw the ERC under Albano, in grave neglect of duty, condone NPC’s over-collection of billions of pesos from the consumers by turning a blind-eye to NPC’s failure to correct its foreign exchange currency denominated obligations every three months, as required by law. In the most recent instance, 21 months had passed and some ten billion pesos were over-collected by NPC from consumers before ERC felt compelled to act.  Albano also failed to expedite the refund to consumers of Meralco’s meter and bill deposits.

That Mr. Albano presided over an ERC riddled with a shoddy record, where good governance was replaced with regulatory capture, and still would have the nerve to recommend his daughter-in-law to succeed him, is a direct affront to 12 million Filipino households which he and the ERC had victimized and made poorer throughout his watch at the ERC.

The selection of the new ERC Chair must be guided by the highest sense of propriety, among others. The appointing authority should ensure an open and transparent process of selection to choose the candidate with utmost probity, competence, and commitment to the public good and the common welfare.

We call upon Gloria Arroyo to put an end to appointing political allies and cronies as rewards to such a crucial post as the ERC. The bad practices of traditional politics have no place in what should be a modern and modernizing ERC.  Instead, someone who has the competence in regulation and a track record in promoting and protecting the public interests should be the chief regulator.

The ‘trapo’ mindset of the politicos has no place in the Commission.  “Good riddance, Chairman Albano. NO! to another politico in ERC.”

PRESS STATEMENT
EmPOWER CONSUMERS
15 July 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

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.