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Monday, March 26, 2012

Abetting power blackmail

By:  Herman Tiu Laurel
Bagong Katipunero
26 Mar 2016 (Monday)

ANGER over the power price issue now erupting in Mindanao is one that this country has not seen since the initial outbursts against the power purchase agreements in Metro Manila almost a decade ago.

North Cotabato Gov. Emilou Talio-Mendoza, for instance, has made direct hits at three power oligarchs operating in Mindanao.  Without mincing words, she accused them of engineering intentional power shortage to force Mindanao to accept the privatization of the vast Agus-Pulangi hydroelectric complex, where the cost of generation is less than P0.01 per kilowatt-hour (kWh) given the systems full depreciation. 
What privatization will do is bring about high power rates, which is what the oligarchs and multilateral financial agencies intend for Mindanao.  Good thing she was joined by General Santos City Mayor Darlene Antonino-Custodio in opposing this move.

As expected, privatization advocates are pinning the blame on those who oppose power privatization.  The March 22 editorial of Malaya, for example, argues that Davao City, which accepted privatization, does not experience blackouts.  What they refuse to highlight is that power rates in Iligan City and the larger province of Lanao del Norte, where power outages frequently occur, hover at P6.56/kWh, compared to Davao's independent power producer (IPP) rates of P8.75/kWh that are at least 25 percent higher.

Evidently, their logic is that people can get uninterrupted power, but at the oligarch's price.  It's nothing short of blackmail.

It's good that Iligan City's residents have refused to sign the 20-year IPP contracts that aim to tie them to exorbitant power rates because they know that the current power shortages, which can be abated with the optimization of hydro-electricity, are merely artificial and short-term.

But absurd as the situation already is, blackmail rates in Mindanao are not even uniform.  In North Cotabato, a Lopez company is reportedly asking P4/kWh for power from the already privatized Mt. Apo geothermal plants, which is dumbfounding given that the people are being made to choose between the blackouts and the high rates when the geothermal resource sits right in their province.

On the part of our legislators, there has been a growing clamor to look into the issue, too.  But, even as such calls are made by Senators Chiz Escudero and Koko Pimentel or Representatives Vicente Belmonte, Rufus Rodriguez and Angelo Palmones, the chairmen of the respective Senate and House energy committees have been less forthcoming.

Serge Osmeña, for one, blames Gloria Arroyo for politicizing the rates in yielding to populist demands by ordering the National Power Corp. (NAPOCOR) to reduce its generation charge below costs, arguing that this is why the EPIRA (Electric Power Industry Reform Act) mandates the sale of NAPOCOR's plants to the private sector, so that the private owners will not have to compete with government plants whose rates can be subsidized.

Surely, given his position, Serge is well aware of several anomalies in the largely privatized Philippine power sector today, such as the Wholesale Electricity Spot Markets casino-like pricing that has yielded rates as high as P60/kWh from private IPPs; and yet he does nothing.  Is that not a case of politicizing policies in favor of price gouging?

Kinship with a known oligarchic clan should have also disqualified Serge from his committee chairmanship due to conflict-of-interest, same with his House counterpart, Dina Abad, whose spouse is the author of the Omnibus Power Bill (precursor to the EPIRA).  But, instead of declining for reason of delicadeza, these solons obediently follow the diktats of the oligarchs and the International Monetary Fund.  Dina even kept on weighing down all proposed inquiries on the power issue for the past decade or so.

Strictly speaking, power rates have never been subsidized by government because consumers themselves have paid for these directly and not just as taxpayers.  Funding for all the investments of NAPOCOR is also sourced straight from the pockets of consumers and taxpayers.  So, what's all that talk about subsidies?

Privatization merely transferred consumers' investments in state-owned power plants and, consequently, these plants surpluses or profits multiplied several times over to private pockets.  The standard modus operandi is epitomized by the Aboitiz Groups purchase of NAPOCOR Power Barges 117 and 118 three years ago for $30 million, which were then revalued at $80 million to form the basis of new rates worth P14/kWh.

In the same way, the intentional power crisis in Mindanao is aimed to force a privatization of the single biggest public asset there that can keep rates down against the price predation of the power oligarchs.  Sadly, successive Yellow regimes supported by the oligarchs (Cory, Ramos, Arroyo and PeNoy) have all done Noynoying of the Agus-Pulangi by failing to dredge it at the very least, thereby reducing its generating capacity.

Meanwhile, captive government agencies continue to sell of NAPOCOR assets for pitiful ditties, while concocting efficiency formulas that give incentives to IPPs, raising their rates of return to as high as 17 percent, and allowing no-bidding on equipment and supplies purchases that are overpriced by up to 1,000 percent.  The Performance Based Regulation schemes three-year revaluation of all assets based on replacement value alone makes these asset values always go up (never to depreciate) and, as a result, the rate base as well.

The EPIRA was passed in 2001 after P500,000 individual payolas were allegedly circulated.  Thereafter, the oligarchs legislative stooges were given free rein to stifle any questions or objections.  Indeed, no progress can happen while they remain in their posts; but then, replacements must be thoroughly vetted by the public, too, lest the new ones proceed to milk the power oligarchs for their mutual benefit.

Amid all the gloom, the courageous Mindanaoans have already prepared a P5-billion class suit against government officials responsible for this intentional power crisis in Mindanao.  My only advice: Make sure that the case does not land on the oligarchs' assets in the judiciary, most especially those being bandied about by Malacañang, and the Yellow media as cleaner than clean.

(Tune in to 1098AM, dwAD, Sulo ng Pilipino/Radyo OpinYon, Monday to Friday,  to 6 p.m.; watch Destiny Cable GNNs HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m., after Lent, on Mining: Bomb or Boon?; visit for our articles plus TV and radio archives)

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from 24 mar 2009