Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
THIRTEENTH CONGRESS
FIRST REGULAR SESSION
House Bill No. 2530
Introduced by Anakpawis
Reps. Crispin B. Beltran and Rafael V. Mariano
EXPLANATORY NOTE
Without
a doubt, the privatization of the Philippine power sector is an imposition of
the Asian Development Bank (ADB) and the World Bank on the Philippine
government. Power privatization was used as a crucial conditionality in the
said foreign multilateral agencies’ trade and financial agreements with the
government.
The
national government under Pres. Gloria Macapagal-Arroyo
and her allies in the Senate and House of Representatives rushed the
privatization of the power sector through the passage of the Electric Power
Industry Reform Act (EPIRA) in 2001 because the enactment of the EPRA was a
conditionality for the release of the second tranche
of the $900 million ADB Power Sector Restructuring loan approved in 1998. The
IMF, in the meantime, made the EPIRA’s approval as a conditionality for the release of a $300 million
rehabilitation loan in 1999.
Despite
pro-privatization individuals and agencies’ assertions that privatizing the
power industry will be beneficial for the people and the national economy,
current developments reveal that it is not only a dismal failure at serving the
public interest, it even attacks the very interest of consumers and the rest of
the Filipino people.
The
privatization of the Philippine energy sector only means higher electricity
rates for consumers, a higher probability of private market power in the
sector, less environmental protection, less consumer protection, and the
legitimization of the anti-consumer, anti-poor policies that strengthen
profiteering and corruption in the bureaucracy.
In
the past, the government dominated the Philippine power sector, taking charge
of generation and transmission. It played a big role in planning, operation,
and regulation. In early 1990s, however, the country experienced power outages
severe enough to be regarded as a national crisis. The government then used
this as a very convenient excuse to turn to the private sector and pave the way
for privatization. The excuse, reality, however was
that the electric power crisis was a result of corruption in the highest levels
of the branches of government including the executive, connivance with foreign
corporations and local monopolies in the energy sector.
In
1987, through an Executive Order that allowed the private sector to generate
electricity, and the Build-Operate-Transfer (BOT) law in infrastructure
projects, the government opened the floodgates for contracts with private
generation companies, now known as independent power producers or IPPs. Full privatization culminated in the signing into law
of Republic Act 9136, or the Electric Power Industry Reform Act (EPIRA) on June
2001. EPIRA mandated the full privatization of the electric Power Industry in
the Philippines following the ADB and World Bank unbundling
model.
Despite
assertions of its proponents in Congress and the Senate, the privatization of
the Philippine power sector was not an autonomous act of government. The ADB
and the WB were closely behind every step of the process of legislation of the
said bill.
Both
banks were quite transparent with their agenda which was to create the biggest
space possible for private sector participation in the industry. The template
for a full-scale power reform program stresses: profitability, competition,
privatization, minimal regulation, and a diminished government role.
The
World Bank and the ADB’s steps to push electric power
sector reform in the Philippines was in faithful adherence to the foregoing
“country assistance strategy”. The WB began process by highlighting the
financial problems of the National Power Corporation (NPC) in its 1988
Philippine Energy Sector Study, and made a pitch for BOTs.
The World Bank then saw the severe brownouts in new sector study in 1994. In
1998, the ADB intensified the pressure by extending the $300 M loan for the
power sector restructuring program.
Three
years after the passage of EPIRA, consumers remain at the mercy of the local
electricity monopolies, their independent power producers, and foreign IPPs. Consumers are burdened with various anomalous charges
automatically passed on to end-users by IPPs through
the National Power Corporation (Napocor) and
distributors like Meralco.
In
line with the EPIRA, the government is also pushing for the privatization of
the National Transmission Corp., or Transco. EPIRA required Napocor
to establish the latter, and its function is to take over the transmission and
sub-transmission functions, assets and liabilities of Napocor.
Transco, like Napocor’s generation assets, will also
be sold out to private businesses. This is also a mandate of the EPIRA. The
sale is currently being facilitated by the Department of Energy (DOE) and the
Department of Finance (DOF). All this would provide more opportunities for
private business to monopolize, exploit and abuse the
local power sector. Again, the main victims will be consumers, and the rest of
the general public.
Aside
from the very obvious detrimental effects on consumers and the national
economy, the creation of the EPIRA itself has been revealed to be steeped in
corruption. On March 11, 2003, the former National Electrification
Administration (NEA) chief Manuel Luis Sanchez told the media that he
personally distributed to certain members of the House of Representatives
checks worth P2.5 million each or a total of P470 million to ensure the passage
of the EPIRA. Sanchez claimed that President Gloria Macapagal-Arroyo
herself directed him to personally attend to the distribution of checks to at
least a hundred solons through telephone conversations that happened twice in
2001. He alleged that these congressmen took money from him in exchange for the
swift passage of the power reform bill.
It
is evident that the problem of exorbitant electricity rates will never be truly
resolved by the neoliberal power reform being peddled
by the government and multilateral creditors. EPIRA only institutionalizes
private monopoly control and perpetrates foreign domination and exploitation of
the national economy and resources at the expense of consumers.
According
to the independent think-tank Ibon Foundation, the
national government already committed a big mistake when it established a
state-owned power corporation that does not control distribution. The Macapagal-Arroyo administration is exacerbating such a
calamitous blunder by turning over lock, stock and barrel power generation and
transmission to private foreign corporations and their local partners.
IBON
also points out that power, like oil and water, are highly strategic sectors in
which effective government control is required by genuine industrialization.
These are not simple commodities that can be abandoned at the mercy of
so-called market forces. These are vital economic services that the people must
have immediate easy access to, and at just affordable rates. Without debate, it
is the duty of the government to ensure that the Filipino people are not denied
or deprived of these services.
The
government has already run out of excuses, or at the least its alibis have been
exposed as empty and false. Those in power cannot use the excuse that it
doesn’t have the funds to implement the nationalization of the power industry.
As has been exposed, the government’s failure to generate much-needed revenues
that should finance the development of strategic sectors such as power is a
direct result of the government’s own twisted orientation of generosity to
foreign investors. This has been in the case of the numerous incentives it
gives to foreign investors and the sweetheart deals it entered with them.
Corruption also remains a serious problem and it continues unchecked.
Also,
as progressive people’s organizations are wont to point out, if the government
has no qualms about shelling out hundreds of billions of taxpayers’ money and
massive chunks of the yearly budget for debt servicing and militarization, then
there is no reason why it cannot finance the development and nationalization of
a sector as vital as power. Electricity is a basic social service and an
indispensable factor in industrialization. This should be given priority.
For
all these reasons, it becomes imperative that the EPIRA should be repealed and
junked outright.
Immediate
passage of this bill is earnestly sought.
Rep
Crispin B. Beltran
Anakpawis
Rep.
Rafael V. Mariano
Anakpawis
Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
THIRTEENTH CONGRESS
FIRST REGULAR SESSION
House Bill No. 2530
Introduced by Anakpawis
Reps. Crispin B. Beltran and Rafael V. Mariano
AN ACT REPEALING REPUBLIC ACT NUMBERED 9136,
OTHERWISE KNOWN AS THE ELECTRIC INDUSTRUY REFORM ACT OF 2001
Section 1. Any provision of law to the contrary
notwithstanding, Republic Act Numbered 9136 entitled “An Act Ordaining Reforms
in the Electric Power Industry, Amending for the Purpose Certain Laws and for
Other Purposes is hereby repealed.
Section 2. This Act shall take effect in fifteen (15)
days after the completion of its publication.
Approved.
