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.
Showing posts with label EPIRA. Show all posts
Showing posts with label EPIRA. Show all posts
Tuesday, February 5, 2008
Tuesday, December 18, 2007
Replace EPIRA with a pro-people power reform law!
As the House of Representatives continues its plenary deliberation on the proposed amendments to the Electric Power Industry Reform Act (EPIRA), as contained in substitute House Bill 3124, members of Freedom from Debt Coalition (FDC) staged a picket today to demand the repeal and replacement of the 2001 power sector privatization and restructuring law with a pro-people power industry reform law.
FDC criticized the “misguided focus” of the House energy committee, chaired by Pampanga Rep. Mickey Arroyo, on lowering the privatization target for Napocor assets from 70 per cent to just 50 per cent in order to accelerate open access and retail competition, stressing that the proposed amendment does not address the basic problems besetting the power industry – high electricity rates and still increasing power-sector restructuring related debts.
The coalition also criticized the presidential son for lying when he introduced HB 3124 at the plenary on December 12, saying that his committee consulted FDC.
“We were never consulted by the Lower House Committee on Energy on this bill. In fact, we were requesting the committee that we be invited to speak before the committee to share our position on the pending bills amending EPIRA. We were told that there are five committee hearings scheduled, the fifth being the schedule for the civil society,” said FDC secretary general Milo Tanchuling.
“We were surprised when we heard that the Committee had already made its report after two hearings,” added Tanchuling.
FDC believes that accelerating open access under the present condition where the power plants are owned by few entities will still not lead to so-called competition envisioned by the government to reduce electricity rates, citing the unresolved price manipulations that happened at the wholesale electricity spot market (WESM) last year.
According to FDC’s study, “accelerating privatization will not prevent price manipulation from happening again as these fail to consider the inherent design of WESM’s trading activity as the main stimulus for market collusion. The potential for implicit collusion through repeated interaction in hourly electricity auction is widely recognized among experts. The WESM practice of announcing its demand forecasts in advance of hourly auctions enables generators to bid strategically by learning the bidding strategies of other bidders. Even at 100 per cent privatization of generating capacity, trading firms in the spot market still have the incentive to coordinate their production and pricing activities to increase their collective and individual profits by restricting market output and raising the market price.”
From only about P5/kWh in 2001, power rates have now risen to about P8.50/kWh to P9/kWh for Metro Manila residential consumers, while rates have been increasing as well in other areas. Meanwhile, industrial electricity rates in the country are now the highest in Asia.
Contrary to the promises of EPIRA six years ago, consumers and taxpayers as well continue to be burdened with high power rates, rising government/NPC debts, and still inefficient, unreliable electricity service.
The power industry needs serious reforms. Unfortunately, the proposed amendments still miss to address this.
The coalition calls for democratization of access, ownership, and control in the industry such as having people-owned and managed generation and distribution utilities; complete halt to the privatization of the transmission sector and generation plants using natural resources; and prohibition of cross ownership between generation, distribution and supply.
Junk HB 3124! Repeal and Replace EPIRA with pro-people power industry reform law!
FDC criticized the “misguided focus” of the House energy committee, chaired by Pampanga Rep. Mickey Arroyo, on lowering the privatization target for Napocor assets from 70 per cent to just 50 per cent in order to accelerate open access and retail competition, stressing that the proposed amendment does not address the basic problems besetting the power industry – high electricity rates and still increasing power-sector restructuring related debts.
The coalition also criticized the presidential son for lying when he introduced HB 3124 at the plenary on December 12, saying that his committee consulted FDC.
“We were never consulted by the Lower House Committee on Energy on this bill. In fact, we were requesting the committee that we be invited to speak before the committee to share our position on the pending bills amending EPIRA. We were told that there are five committee hearings scheduled, the fifth being the schedule for the civil society,” said FDC secretary general Milo Tanchuling.
“We were surprised when we heard that the Committee had already made its report after two hearings,” added Tanchuling.
FDC believes that accelerating open access under the present condition where the power plants are owned by few entities will still not lead to so-called competition envisioned by the government to reduce electricity rates, citing the unresolved price manipulations that happened at the wholesale electricity spot market (WESM) last year.
According to FDC’s study, “accelerating privatization will not prevent price manipulation from happening again as these fail to consider the inherent design of WESM’s trading activity as the main stimulus for market collusion. The potential for implicit collusion through repeated interaction in hourly electricity auction is widely recognized among experts. The WESM practice of announcing its demand forecasts in advance of hourly auctions enables generators to bid strategically by learning the bidding strategies of other bidders. Even at 100 per cent privatization of generating capacity, trading firms in the spot market still have the incentive to coordinate their production and pricing activities to increase their collective and individual profits by restricting market output and raising the market price.”
From only about P5/kWh in 2001, power rates have now risen to about P8.50/kWh to P9/kWh for Metro Manila residential consumers, while rates have been increasing as well in other areas. Meanwhile, industrial electricity rates in the country are now the highest in Asia.
Contrary to the promises of EPIRA six years ago, consumers and taxpayers as well continue to be burdened with high power rates, rising government/NPC debts, and still inefficient, unreliable electricity service.
The power industry needs serious reforms. Unfortunately, the proposed amendments still miss to address this.
The coalition calls for democratization of access, ownership, and control in the industry such as having people-owned and managed generation and distribution utilities; complete halt to the privatization of the transmission sector and generation plants using natural resources; and prohibition of cross ownership between generation, distribution and supply.
Junk HB 3124! Repeal and Replace EPIRA with pro-people power industry reform law!
Wednesday, December 12, 2007
TRANSCO bid winner favors close Malacanang ally
Debt watchdog Freedom from Debt Coalition (FDC) tagged the recently concluded bidding for the 25-year concession contract to operate the National Transmission Corporation (Transco) a “lutong macao.”
The consortium of Monte Oro Grid Resources Corp. submitted the highest offer of $3.95 billion to operate the country's power grid, outbidding San Miguel Energy which tabled a bid of $3.905 billion.
“We are not surprised that Macapagal-Razon won the bidding because of the alleged closeness to Malacañang not only of these people from Monte Oro Grid Resources, but also of the Chinese government through Monte Oro’s partner State Grid Corporation of China,” said FDC outgoing president Ana Maria R. Nemenzo.
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, the brother of Gloria Arroyo. Meanwhile, Enrique Razon, a known close ally of Gloria Arroyo, served as treasurer of the administration Team Unity in the May senatorial elections.
“We doubt that a real bidding process took place,” Nemenzo added.
FDC explained that the result is expected to be in favor of Macapagal-Razon of Monte Oro Grid Resources since it turned out that of the four “qualified” bidders only two proceeded with the bid.
The two final bidders were the consortium of State Grid Corporation of China and Monte Oro Grid Resources and the San Miguel Energy Corp. and TPG Aurora B.V.
Two Rivers Pacific Holdings Corporation and its partner Terna-Rete Electtrica Nazionale S.P.A. did not participate in the final bidding while the consortium of Citadel Holdings Inc. and Power Grid Corp of India Ltd. reportedly backed out Tuesday.
“We suspect that Two Rivers did not participate in the bidding because of the serious issues we raised that it has not met the 60 per cent Filipino ownership requirement,” said Nemenzo.
“We also understand that some quarters are raising possible violation by San Miguel Energy Corp. of the cross-ownership provision of the Electric Power Industry Reform Act (EPIRA). Allowing such company to participate in the bidding puts the credibility and integrity of the pre-qualification and the actual bidding in question,” Nemenzo added.
Reportedly, subsidiaries of San Miguel Energy – San Miguel Corp. Bacolod, San Miguel Mills Inc. Batangas, and San Miguel Packaging Specialists Inc., are either generation or distribution companies or customers of Transco.
The consortium of Monte Oro Grid Resources Corp. submitted the highest offer of $3.95 billion to operate the country's power grid, outbidding San Miguel Energy which tabled a bid of $3.905 billion.
“We are not surprised that Macapagal-Razon won the bidding because of the alleged closeness to Malacañang not only of these people from Monte Oro Grid Resources, but also of the Chinese government through Monte Oro’s partner State Grid Corporation of China,” said FDC outgoing president Ana Maria R. Nemenzo.
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, the brother of Gloria Arroyo. Meanwhile, Enrique Razon, a known close ally of Gloria Arroyo, served as treasurer of the administration Team Unity in the May senatorial elections.
“We doubt that a real bidding process took place,” Nemenzo added.
FDC explained that the result is expected to be in favor of Macapagal-Razon of Monte Oro Grid Resources since it turned out that of the four “qualified” bidders only two proceeded with the bid.
The two final bidders were the consortium of State Grid Corporation of China and Monte Oro Grid Resources and the San Miguel Energy Corp. and TPG Aurora B.V.
Two Rivers Pacific Holdings Corporation and its partner Terna-Rete Electtrica Nazionale S.P.A. did not participate in the final bidding while the consortium of Citadel Holdings Inc. and Power Grid Corp of India Ltd. reportedly backed out Tuesday.
“We suspect that Two Rivers did not participate in the bidding because of the serious issues we raised that it has not met the 60 per cent Filipino ownership requirement,” said Nemenzo.
“We also understand that some quarters are raising possible violation by San Miguel Energy Corp. of the cross-ownership provision of the Electric Power Industry Reform Act (EPIRA). Allowing such company to participate in the bidding puts the credibility and integrity of the pre-qualification and the actual bidding in question,” Nemenzo added.
Reportedly, subsidiaries of San Miguel Energy – San Miguel Corp. Bacolod, San Miguel Mills Inc. Batangas, and San Miguel Packaging Specialists Inc., are either generation or distribution companies or customers of Transco.
TRANSCO bid winner favors close Malacanang ally
Debt watchdog Freedom from Debt Coalition (FDC) tagged the recently concluded bidding for the 25-year concession contract to operate the National Transmission Corporation (Transco) a “lutong macao.”
The consortium of Monte Oro Grid Resources Corp. submitted the highest offer of $3.95 billion to operate the country's power grid, outbidding San Miguel Energy which tabled a bid of $3.905 billion.
“We are not surprised that Macapagal-Razon won the bidding because of the alleged closeness to Malacañang not only of these people from Monte Oro Grid Resources, but also of the Chinese government through Monte Oro’s partner State Grid Corporation of China,” said FDC outgoing president Ana Maria R. Nemenzo.
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, the brother of Gloria Arroyo. Meanwhile, Enrique Razon, a known close ally of Gloria Arroyo, served as treasurer of the administration Team Unity in the May senatorial elections.
“We doubt that a real bidding process took place,” Nemenzo added.
FDC explained that the result is expected to be in favor of Macapagal-Razon of Monte Oro Grid Resources since it turned out that of the four “qualified” bidders only two proceeded with the bid.
The two final bidders were the consortium of State Grid Corporation of China and Monte Oro Grid Resources and the San Miguel Energy Corp. and TPG Aurora B.V.
Two Rivers Pacific Holdings Corporation and its partner Terna-Rete Electtrica Nazionale S.P.A. did not participate in the final bidding while the consortium of Citadel Holdings Inc. and Power Grid Corp of India Ltd. reportedly backed out Tuesday.
“We suspect that Two Rivers did not participate in the bidding because of the serious issues we raised that it has not met the 60 per cent Filipino ownership requirement,” said Nemenzo.
“We also understand that some quarters are raising possible violation by San Miguel Energy Corp. of the cross-ownership provision of the Electric Power Industry Reform Act (EPIRA). Allowing such company to participate in the bidding puts the credibility and integrity of the pre-qualification and the actual bidding in question,” Nemenzo added.
Reportedly, subsidiaries of San Miguel Energy – San Miguel Corp. Bacolod, San Miguel Mills Inc. Batangas, and San Miguel Packaging Specialists Inc., are either generation or distribution companies or customers of Transco.
The consortium of Monte Oro Grid Resources Corp. submitted the highest offer of $3.95 billion to operate the country's power grid, outbidding San Miguel Energy which tabled a bid of $3.905 billion.
“We are not surprised that Macapagal-Razon won the bidding because of the alleged closeness to Malacañang not only of these people from Monte Oro Grid Resources, but also of the Chinese government through Monte Oro’s partner State Grid Corporation of China,” said FDC outgoing president Ana Maria R. Nemenzo.
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, the brother of Gloria Arroyo. Meanwhile, Enrique Razon, a known close ally of Gloria Arroyo, served as treasurer of the administration Team Unity in the May senatorial elections.
“We doubt that a real bidding process took place,” Nemenzo added.
FDC explained that the result is expected to be in favor of Macapagal-Razon of Monte Oro Grid Resources since it turned out that of the four “qualified” bidders only two proceeded with the bid.
The two final bidders were the consortium of State Grid Corporation of China and Monte Oro Grid Resources and the San Miguel Energy Corp. and TPG Aurora B.V.
Two Rivers Pacific Holdings Corporation and its partner Terna-Rete Electtrica Nazionale S.P.A. did not participate in the final bidding while the consortium of Citadel Holdings Inc. and Power Grid Corp of India Ltd. reportedly backed out Tuesday.
“We suspect that Two Rivers did not participate in the bidding because of the serious issues we raised that it has not met the 60 per cent Filipino ownership requirement,” said Nemenzo.
“We also understand that some quarters are raising possible violation by San Miguel Energy Corp. of the cross-ownership provision of the Electric Power Industry Reform Act (EPIRA). Allowing such company to participate in the bidding puts the credibility and integrity of the pre-qualification and the actual bidding in question,” Nemenzo added.
Reportedly, subsidiaries of San Miguel Energy – San Miguel Corp. Bacolod, San Miguel Mills Inc. Batangas, and San Miguel Packaging Specialists Inc., are either generation or distribution companies or customers of Transco.
Power consumer groups urge government to stop Transco privatization
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).
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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