[Press Release] After 10 years of implementation: EPIRA enriches “Voltage 5”

Posted on June 9, 2011 by Human Rights Online Philippines Leave a comment

Ten years since the passage of the Electric Power Industry Reform Act (EPIRA), its promise of affordable and accessible electricity to all through privatization and a leveled playing field in the industry has turned into its complete opposite.

Today, the Philippines suffers from the highest residential and industrial power rates in Asia, even higher than Japan. As a consequence, millions of Filipino consumers are much poorer, electricity wise—adding another facet to the worsening problem of Philippine poverty, including the increased burden on our women. Another victim is our industries, the share of which in our gross domestic product (GDP) has been on a downward path for the past 25 years and our agriculture which has generally declined as a share of our GDP since postwar years.

In contrast to our electricity-starved citizenry and economy, five super-rich families have become much, much richer, having cornered the fruits of EPIRA privatization which in practice has dropped all pretensions of opening up the electric power industry to as many competitive players as possible.

The Lopez and Aboitiz families have reaped the oligopolistic super-profit bonanzas from the cross-ownership of power generation and distribution. To share the ever-enlarging super-profit pie now is the rising “pacman,” Manny V. Pangilinan to whom controlling ownership of Meralco, the distribution super-monopoly of Luzon, has passed. Not far behind is Danding Cojuangco’s San Miguel Corporation which has grabbed 30 percent of power generation nationwide.

In addition, the formerly state-owned National Transmission Corporation (TRANSCO), which handles high-voltage power transmission from power generation to distribution companies, is now in the hands of the private joint venture corporation, the National Grid Corporation of the Philippines (NGCP). Co-owners of NGCP are Monte Oro Grid Resources Corporation which is now owned by the One Taipan Holdings, Inc. of Henry Sy of SM chain of giant malls fame, the Coyuito-led Calaca High Power Corporation, and the China State Grid Industry Development Ltd, a Chinese State corporation which owns 40 percent of the shares. The current NGCP president is Henry Sy Jr., son of the SM taipan. It is interesting to note that the Sys bought Monte Oro from Enrique Razon Jr., who is closely associated with former President Gloria Macapagal Arroyo and who made a large killing out of this sale in less than a year after winning the bid.

We recall that one of the desperate messages contrived by the Ramos administration to justify EPIRA is the need to pay the gargantuan debts of the state-owned National Power Corporation or NPC. By 2001, total NPC debts stood at $16.3 billion or P831 billion (P51: US$1, 2001 exchange rate).

In accordance with EPIRA, the Power Sector Assets and Liabilities Management Corporation (PSALM) was set up to privatize NPC power plants and settle its debts. But as of 2010, NPC debts stood at $15.8 billion or P679.4 billion (P43: US$ 1, 2010 exchange rate), registering a small reduction.

PSALM’s failed to retire NPC debts despite repeated power rate increases and power adjustments under EPIRA which were all shouldered by consumers, not to mention the burden of additional taxes used to invest in NPC power plants – more than 90 percent of which have been sold to pay NPC debts. In addition, PSALM made major blunders that further aggravate its financial status like the losses from Wholesale Electricity Spot Market (WESM) trading in October 2008 to almost P1 billion. This is aside from an unconfirmed report that the agency gave an eight-month salary bonus to its officials and employees in 2010 despite its discouraging asset management performance.

So powerful has been the oligarchic clout over the electric power industry and oligarchic influence over state agencies that regulatory capture is the word that can best describe the fate of the Energy Regulatory Commission (ERC). Time and again, consumers are up in arms protesting the bias of its decisions in favor of Meralco and other large distribution companies.

Against all facts and figures indicating the damaging effect of privatization under EPIRA on our consumers and the national economy, large vested interests and their allies in government are still hell-bent on privatizing the rural electric cooperatives. This remaining social sector or non-profit, non-state sector of the electric power industry got the mandate to electrify most of our provinces, particularly during the Marcos regime. Despite the traditional politics and management and financial troubles of a number of these cooperatives, many of them can claim success.

Ten years of a failed privatization scheme under EPIRA should convince the Philippine government, especially Congress, to overhaul it. Our people need and deserve a new electric power reform law that will really provide affordable, accessible and clean electricity to all. They need and deserve an electric power industry where private participation can have a place but where the State and the public/social sector dominate to secure public welfare and guarantee a national development that is based on equitable growth, sustainability and gender equality.

RICARDO B. REYES
President, Freedom from Debt Coalition

Contact person:
Ricardo B. Reyes, FDC President, +63.918.907.0674
PRESS STATEMENT
08 June 2011