Policy change needed for energy crisis solution

As expected, the Energy Summit did not offer any real or lasting solutions to the problems facing the oil and power sectors.

The proposed summit recommendations—revisiting the nuclear power option and more foreign and private investments in the whole energy sector — like the Electric Power Industry Reform Act (EPIRA) and Oil Deregulation Law that preceded it — will only exacerbate already serious problems therein.

Likewise, proposals to lift or suspend the value-added tax (VAT) on oil and power and the scrapping of oil deregulation law are more likely to be junked by a panel of experts the energy department has assembled over the weekend at the Asian Development Bank to finalize the summit’s resolutions.

The Freedom from Debt Coalition (FDC) believes that without changing the paradigm and current policies of the government, the summit’s resolutions will end up as mere palliatives to a chronic crisis.

The Coalition is pushing for the lifting of VAT on oil and power and the cancellation of onerous independent power producer (IPP) contracts to significantly reduce the cost of fuel and power in the country. It is also for the scrapping of the oil deregulation and EPIRA law to restore and strengthen the role of the State and communities in the oil and power industry.

Moreover, FDC is fighting for a paradigm that recognizes the crucial importance of renewable energy, environmentally sustainable technology, community participation and control – a paradigm we believe, is beyond the imagination of the Arroyo government, global capital, international financial institutions (IFIs) and the threat of climate change. The use of fossil fuel such as oil is the biggest factor behind climate change.

Clearly, what manifested during the week-long summit is the ‘solid defense’ put up by the government, IFIs such as the Asian Development Bank (ADB) and International Monetary Fund (IMF)-World Bank, and the oil and utility giants in blocking proposals to overhaul the ‘fundamentals’ – the deregulation and privatization policies which made the costs of oil and power one of the highest in the world.

Prices of oil rose by more than 500 percent since the passage of the Oil Deregulation Law in 1998. Pump prices was up P4 per liter further when Mrs. Gloria Macapagal-Arroyo imposed VAT on petroleum products. Electricity rates, on the other hand, had doubled since EPIRA was enacted in 2001. The IFIs were all behind the crafting as well as the financing of these policy reforms in the oil and power industry. ADB loans in the country’s energy sector for the last 30 years (1978 to 2008), for instance, is already around $2.8 billion.

We know the days of cheap oil are over. But we also know that these days, transnational oil and power companies are enjoying super profits that the so called reforms in power and oil sectors have advanced rather than controlled.

The Arroyo government has decided to align itself with global capital rather than with ordinary and struggling consumers, in an unholy alliance blessed by the IFIs. We are condemned to ever rising oil and power prices, with little or no prospects of immediate relief and lasting long-term solutions to make life more bearable particularly for the least advantaged.