WITH the privatization of the Masinloc power plant, the National Economic and Development Authority (Neda) said the government will become more assured that its fiscal measures to help Filipinos cope with high commodity prices will be properly financed.

Masinloc is the eighth and largest power plant to be privatized out of a total of 31 plants identified to be sold. The sale of the Masinloc plant will bring in $930 million to the government.

Neda acting director general Augusto Santos said the government’s plans to exempt minimum-wage earners from paying taxes, promote the condonation of penalties for Government Service Insurance System (GSIS) and the Social Security System (SSS) loans, and the proposed decrease in corporate income tax to 25 percent from 35 percent will all place a dent on the finances of the government.

Ensuring that there will be enough funds to allow the government to continue in its numerous functions, Santos said the sale of big-ticket assets like the Masinloc plant are necessary.

The Neda chief also said this will play a significant role in making sure that the government meets its goal of balancing the budget this year.

The Asian Development Bank (ADB), on the other hand, said privatizing the Masinloc power plant will help the government in its efforts to reduce electricity prices. The Philippines has some of the highest electricity prices in the region.

AES will sell the output of the Masinloc plant through the wholesale electricity market both on a spot or “merchant” basis and under long-term contracts. The ADB said that AES has considerable experience in the “merchant” power business worldwide.

As the Philippine electricity market deepens, the ADB said AES intends to offer more sophisticated risk-mitigation products to customers.

“It will help boost market confidence and encourage further privatizations of assets belonging to the state-owned National Power Corp.,” ADB said.

With electricity demand on the Philippines’ main island of Luzon increasing by about 11 percent last year, an estimated $1.7 billion is needed to finance the construction of new power plants in coming years.

Once rehabilitated, electricity output at Masinloc will nearly double and the plant is estimated to have a lifespan of 40 years. The ADB said that it has disbursed a $200 million worth loan for the privatization of the state-owned Masinloc coal-fired power plant.

In a statement, the ADB said that it approved the loan in the hope of increasing competition in the electricity market. The loan was granted to US-based AES Corp., which won the right to acquire the 660-megawatt Masinloc power plant.

“The ADB’s involvement acts as a catalyst for the privatization of the plant, which will lower the Philippines’ national debt burden,” ADB senior investment specialist Kurumi Fukaya said.

AES Corp. acquired the Masinloc plant through international competitive bidding for the price of $930 million. This amount is being financed through various equity investments from AES, the International Financing Corp. (IFC) and commercial banks. The cost to buy, rehabilitate and operate the plant is being financed through equity investments and subordinated loans of $400 million from US-based AES Corp. and $35 million from the IFC. The remaining cost is being provided by four commercial banks.

“AES has paid 100 percent of the purchase price to the government to complete the acquisition in one step. It will invest $47 million in the plant’s rehabilitation, which will improve its operating efficiency and bring its environmental, health and safety performance up to global standards,” the ADB said.

FARMERS’ groups are asking the government to impose a total ban on the conversion of all irrigated and irrigable lands to residential, commercial and industrial purposes.

DAVAO CITY—About 1.2 million hectares of land are still awaiting acquisition for distribution to 1 million farmers nationwide, many of them owned by corporations and powerful politically influential families, the Department of Agrarian Reform (DAR) said.

THE local jewelry industry has asked the government to start negotiating with Washington for the retention of the duty-free privilege given to Philippine jewelry exports under the US Generalized System of Preference (GSP).

ZAMBOANGA CITY—Key officials and private-sector players in the field of information and communications technology (ICT) in the Brunei Darussalam-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-Eaga) have recently agreed to heighten promotion of the use of wireless technology as an innovative step in enhancing BIMP-Eaga’s relevance in the global market during the 3rd BIMP-Eaga Telecommunications Meeting held in Brunei.

WHAT about us?

This was the question posed by militant groups in the fishery and agriculture sector following reports that only 5 million of the close to 34 million workers, or 15 percent of the country’s labor force, will benefit from President Arroyo’s promised wage increase.

WITH the privatization of the Masinloc power plant, the National Economic and Development Authority (Neda) said the government will become more assured that its fiscal measures to help Filipinos cope with high commodity prices will be properly financed.