Stressing that public interest is at stake, electricity consumer groups Freedom from Debt Coalition and EmPOWER Consumers today staged a rally in front of the Power Sector Assets & Liabilities Management Corporation (PSALM) office in Makati City to oppose the bidding of the operation of the country’s “crown jewel”—the National Transmission Corporation (Transco).
The groups asserted that as a natural monopoly and as the biggest public utility, Transco is imbued with public interest. Thus, it must remain in the public sphere and held by public hands.
FDC president Ana Maria R. Nemenzo said: “The Filipino people will be at the losing end if the government pushes through with the privatization of Transco. We can be held hostage by whoever will operate Transco as it will literally have the “power” and control in the flow of electricity in the country.”
“Moreover, the government could potentially lose some P123 billion to P249 billion if it relinquishes the operation of Transco to the private sector. As a monopoly and with operations covering the entire country, Transco surely rakes in handsome revenues for the government. It can earn P375 billion for 25 years with its annual income of P15 billion while it will only earn P126 billion ($1=P42) if the concession contract is bid at $3 billion or P252 billion if bid at $6 billion,” Nemenzo explained.
“It is no wonder why many big businesses and influential families, including the family of President Gloria Arroyo, are interested to acquire the 25-year concession agreement to operate and maintain the $3-billion crown jewel of the government,” she stressed.
Walter Brown of Monte Oro Grid Resources, the so-called Filipino company partner of State Grid Corporation of China, is reportedly affiliated with Diosdado “Buboy” Macapagal Arroyo, the brother of Gloria Arroyo.
“Worse, with Transco privatization, it is not just simply transferring the monopoly/control of this strategic utility from the government to private. It may be transferring the control to the switchboard from the Philippine government to the foreign government like the State Grid Corporation of China or foreign companies,” said Nemenzo.
Together with the National Association of Electricity Consumers for Reforms, FDC has also urged PSALM to stop the bidding as one of the “qualified” bidders, Two Rivers Pacific Corporation (“Two Rivers”), does not meet the minimum of 60 per cent Filipino ownership required by law for companies that will be operating a public utility such as Transco.
“This questions the credibility of the bidding process, particularly the due diligence conducted by PSALM,” said Nemenzo.
Based on documents secured by the two groups, Two Rivers is 99.995 per cent owned by Metro Pacific Investment Corp. (MPIC) wherein Metro Pacific Holdings, Inc. (MPHI) has an equity interest of 92.83 per cent. Further, First Pacific Company Limited (“First Pacific”), a Hong Kong-listed company, appears to have 100 per cent ownership in Metro Pacific Holdings, Inc. (MPHI). Thus, Two Rivers is more than 90 per cent foreign-owned.
The groups also found out that even another subscriber to Two Rivers, the Pilipinas First Transmission Holdings Corporation, claimed by SEC to have 60 per cent ownership in Transco appears to be also foreign-owned.
Two Rivers is supposedly the “Filipino” partner of Italy's Terna-Rete Electtrica Nazionale S.P.A. Other qualified bidders are San Miguel Energy Corp, a unit of food and drinks group San Miguel Corp. and TPG Aurora B.V. and the consortium of Citadel Holdings Inc. and Power Grid Corp of India Ltd.
Under the Electric Power Industry Reform Act (EPIRA), Transco will be privatized by way of an outright sale or concession contract. The latter mode of privatization was the one approved by the Joint Congressional Power Commission (JCPC).
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